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1997 


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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 


WITHDRAWN 

L.  A.  00.  L.  k 


THE 


TRUE  DOCTRINE  OF  ULTRA  YIRES 


IN 


THE  LAW  OF  CORPORATIONS 


BEING 


A  CONCISE  PRESENTATION  OF  THE  DOCTRINE  IN  ITS 

APPLICATION  TO  THE  POWERS  AND  LIABILITIES 

OF  PRIVATE  AND  MUNICIPAL  CORPORATIONS 


BY 

REUBEN  A.  REESE,  Esq. 

Of  the  Colorado  Bar 


CHICAGO 

T.  H.  FLOOD  AND  COMPANY 

1897 


Copyright,  1897, 

BY 

T.  H.  FLOOD  &  CO. 


STATE  JOURNAL  PRINTING  COMPANY, 

Printers  and  Stereotypers, 

madison,  wis. 


TO    THE 

HOK  THOMAS  J.  BALLmOEK, 

OF   TEXAS, 

WHOSE    MASTEKFCL    ABILITIES    AS    A    LAWYEE, 

UNIMPEACHABLE    INTEGKITY    AS    A   MAN, 

AND 

UNSWERVING    LOYALTY   AS    A   FRIEND, 

MAKE    HIS 

ACQUAINTANCE   AN   HONOR   AND    HIS   COMPANIONSHIP 

A    DELIGHT, 

AS   A    SLIGHT   ACKNOWLEDGMENT 

OF   THE 

HIGH   REGARD   IN   WHICH    HE    IS    HELD   BY    THE    AUTHOR, 

THIS    VOLUME 

IS   RESPECTFULLY    INSCRIBED. 


^Aa>nd!^ 


PREFACE. 


The  aim  and  purpose  of  this  volume  is  to  set  forth 
in  a  concise  and  practical  way  the  established  principles 
of  the  Doctrine  of  Ultra  Vires  in  its  application  to 
the  acts  and  contracts  of  corporations  both  public  and 
private.  By  the  title  —  "  The  True  Doctrine  of  TJltra 
Vires^^ — no  reflection  is  meant  to  be  made  upon  other 
writers  who  have  heretofore  treated  the  subject  in  works 
on  corporation  law,  although,  in  some  respects,  the  views 
herein  expressed  are  diametrically  opposed  to  those  of 
some  modern  law  writers  who  have  casually  discussed 
the  various  phrases  of  this  doctrine.  In  whatever  feat- 
ures, however,  this  brief  exposition  of  the  subject  differs 
from  its  presentation  by  others,  comparison  as  to  the 
number  and  character  of  authorities  cited  to  sustain  the 
propositions  laid  down  is  respectfully  invited.  In  style 
and  composition  neither  classical  precision,  stilted  phrase- 
ology, nor  laborious  efforts  at  "  fine  writing,"  has  been 
attempted,  the  main  object  being  to  furnish  a  brief  and 
practical  compendium  of  the  doctrine  of  ultra  vires  for 
the  practicing  attorney;  and  it  is  believed  the  work, 
though  purposely  condensed,  may  for  that  reason  be  all 
the  more  useful  to  him  for  ready  reference.     The  diffi- 


VI  PREFACE. 

culties  to  be  overcome  in  classifying  and  arranging,  under 
separate  headings,  the  several  branches  of  the  subject, 
and  at  the  same  time  avoid  discussing  in  detail  the  gen- 
■eral  law  of  corporations,  which  has  already  been  fully 
considered  by  many  eminent  commentators,  are  quite  ap- 
parent, and  this  in  some  measure  may  account  for  the 
fact  that  no  American  treatise  on  the  doctrine  has  ever 
been  published.  The  obstacles  to  be  surmounted  in  the 
preparation  of  a  work  of  this  character  will,  it  is  to  be 
hoped,  insure  to  the  writer  the  kind  indulgence  of  the 

profession, 

E.  A.  E. 

Colorado  Springs, 
March  4,  1897. 


CONTENTS. 


CHAPTER  I. 

CREATION   AND   CONSTRUCTION    OF    CORPORATE   CHAR- 
TERS. 

Part  I. 

CREATION   OF   CHARTERS. 
Section.  Page. 

1.  Inti'oductory ■    .     .     .     .  1 

2.  A  corporation  a  legal  entity 3 

3.  Creation  of  chartered  corporations 2 

4.  What  acceptance  of  charter  implies 7 

5.  Distinction  between  natural  and  artificial  persons      .     .  8 

6.  Distinction  between  corporation  and  partnership  ...  9 

7.  Distinction  between  coi'porations  under  general  and  spe- 

cial act 10 

Part  II. 

CONSTRUCTION  OF  CHARTERS. 

8.  General  rule  of  construction 12 

9.  Corporations  have  onlj^  powers  given  by  charters  ...       13 

10.  Rule  peculiarly  applicable  to  corporation  organized  under 

general  laws Ifi 

11.  Ultra  vires  questions  decided  by  law  of  organization       .  17 

12.  Province  of  court  in  construing  corporate  powers       .     .  20 

13.  Powers  construed  as  incidental  to  those  expressly  given  21 

14.  Discretion  of  corporations 22 

15.  Miscellaneous  incidental  powers 22 

CHAPTER  II. 

THE  DOCTRINE  OF  ULTRA  VIRES. 

THE  DOCTRINE    GENERALLY. 

16.  Introductory 25 

17.  C7/ira  ftVes  — Senses  in  which  term  used 26 


Vlll  CONTENTS. 

Section.  Page. 

18.  Principles  of  doctrine  plain 28 

19.  Two  propositions  of  doctrine  settled 28 

20.  Chronological  review  of  doctrine 30 

21.  Head  v.  Providence  Ins.  Co 30 

22.  People  v.  Utica  Ins.  Co 31 

23.  New  York  Firemen's  Ins.  Co.  v.  Sturges 31 

24.  Bank  of  United  States  v.  Dandridge 33 

25.  Beach  v.  Fulton  Bank 33 

26.  Bank  of  Augusta  v.  Earle 33 

27.  Barry  v.  Merchants'  Exchange 33 

28.  Perrine  v.  Chesapeake,  etc.  Canal  Co 34 

29.  Hood  v.  New  York,  etc.  R.  Co 34 

30.  Pearce  v.  Madison,  etc.  R.  Co 37 

31.  Bissell  V.  Michigan,  etc.  R.  Co.   . 39 

33.  Monument  Nat.  Bank  v.  Globe  Works      ......  41 

33.  Miners'  Ditch  Co.  v.  Zellerbach 43 

34.  Franklin  Co.  v.  Lewistown  Institute  for  Savings    ...  43 

35.  Thomas  v.  Railroad  Co 43 

36.  Davis  v.  Old  Colony  R.  Co 45 

37.  Central  Transp.  Co.  v.  Pullman's  Palace  Car  Co.     ...  46 

38.  Lucas  v.  White  Line  Transp.  Co 51 

39.  The  doctrine  as  construed  by  English  courts  —  Colman  v. 

Eastern  Counties  Ry.  Co 55 

40.  East  Anglian  Co.  v.  Eastern  Counties  Ry.  Co 57 

41.  Ashbury,  etc.  Ry.  Co.  v.  Riche 58 

43.  Attorney-General  v.  Great  Eastern  Ry.  Co. 64 

43.  Small  et  al.  v.  Smith  et  al 65 

44.  Baroness  Wenlock  v.  River  Dee,  etc 65 

45.  Trevor  v.  Whitworth 66 

CHAPTER  III. 

CONTRACTS  OF  CORPORATIONS. 

THE  DOCTRINE  APPLIED  TO  CONTRACTS  GENERALLY. 

46.  Introductory 67 

47.  Application  of  doctrine  to  contracts  generally  ....  68 

48.  Province  of  court  in  applying  doctrine 69 

49.  Tendency  of  courts  to  disregard  statutory  enactments    .  70 

50.  As  to  incidental  contractual  powers 73 

51.  Irregularity  no  defense  to  liability  on  corporate  contracts  73 


CONTENTS.  iX 

Section.  Page. 

52.  When  charter  prescribes  mode  of  contracting,  must  be 

strictly  pursued 74 

53.  All  persons  bound  to  take  notice  of  limits  of  corporate 

powers 75 

54.  Why  corporations  not  liable  on  ultra  vires  contracts  .     .  76 

55.  Distinction  between  ultima  vires  and  illegal  contracts       .  77 

56.  Prohibited  contracts  regarded  as  illegal  and  void  ...  79 

57.  Unauthorized  contracts  none  the  less  illegal  because  ig- 

nored by  courts 80 

CHAPTER  ly. 

THE  DOCTRINE  APPLIED  TO  EXECUTED  CONTRACTS. 

58.  Estoppel  —  Defense  of  ultra  vires  to  executed  contracts  .  83 

59.  Same  subject 84 

60.  Same  subject  —  Corporation  similar  to  one  under  legal  dis- 

ability      85 

61.  Performance  by  innocent  party  to  contract  ultra  vires  a 

corporation 86 

63.     Position  of  United  States  supreme  court  on  alleged  rule  89 

63.  San  Antonio  v.  Mehaffey 91 

64.  Railway  Co.  v.  McCarthey 98 

65.  Hitchcock  v.  Galveston 94 

66.  Jones  v.  Guaranty  Co 97 

67.  National  Bank  v.  Mathews 97 

68.  Central  Transp.  Co.  v.  Pullman  Car  Co 98 

CHAPTER  V. 

ACTIONS  ON  ULTRA  VIRES  CONTRACTS. 

69.  General  rule  as  to  actions  on  illegal  contracts  ....  100 

70.  Ultra  vires  as  defense  to  actions  —  General  rule     .     .     .  102 

71.  Court  must  be  satisfied  of  legality  of  contract  ....  104 

72.  Actions  on  executed  ultra  vires  contracts 105 

73.  Actions  in  courts  of  equity  and  at  law 107 

74.  Quantum  meruit — Relief  on  MZi?'a  mVes  contracts       .     .  113 

75.  Relief  on  contracts  ultra  vires  and  under  statute  of  frauds  116 

CHAPTER  YI. 

ADOPTION  AND  RATIFICATION  OF  CONTRACTS. 

76.  General  doctrine  of  ratification  stated 119 

77.  Nature  and  effect  of  ratification 120 


X  CONTEXTS. 

Section.  Page. 

78.  Ultra  vires  contracts  of  corporations  cannot  be  ratified  121 

lO.  Eatification  by  corporation  of  acts  of  promoters     .     .     .  123 

CHAPTER  VII. 

THE  DOCTRINE  APPLIED  TO  INCIDENTAL  POWERS  OF 
CORPORATIONS. 

80.  Introductory 126 

81.  Power  to  acquire  real  property 127 

82.  Devise  to  corporations 131 

83.  Jus  disponendi  in  corporations 131 

84  Power  to  sell  implies  power  to  mortgage 133 

85.  Power  of  bank  to  hold  real  estate 134 

86.  Power  to  acquire  by  eminent  domain 135 

87.  Alienation  by  deed 136 

88.  Conveyance  by  agent  .     .     .     .  ■ 137 

89.  Acknowledgment  to  corporate  deeds 137 

"90.  Affixing  seal  to  deeds 138 

Dl.  Assignment  for  benefit  of  creditors 138 

■92.  Power  to  act  as  trustee 139 

93.  Trust  must  be  within  scope  of  corporate  powers     .     .     .  140 

94.  Cannot  be  compelled  to  execute  repugnant  trust  .     .     .  140 

95.  Power  to  take  by  bequest 141 

96.  Power  to  borrow  money 142 

97.  Test  to  determine  if  transaction  is  borrowing  ....  144 

98.  Instances  of  implied  power  to  borrow 144 

99.  Power  to  loan  money 140 

100.  Power  as  to  negotiable  notes 147 

101.  Power  as  indorsee 149 

102.  Power  of  savings  bank  to  make  negotiable  paper  .     .     .  149 

103.  Power  as  to  discount  and  purchase 149 

104.  Liability  on  accommodation  paper 151 

105.  Power  to  pledge  securities 151 

CHAPTER  YIII. 

POWERS  AND  LIABILITIES  AS  TO  CAPITAL  STOCK 

106.  Introductory  —  Nature  and  purpose  of  capital  stock  ,     .  152 

107.  Capital  stock  as  a  trust  fund 153 

108.  Limitation  on  doctrine  that  capital  stock  a  trust  fund    .  155 

109.  Power  to  increase  capital  stock 156 


CO  J^  TENTS.  XI 

Section.  Page. 

110.  Consent   of  stockholders  necessary  to  increase  capital  j^ 

stock 157 

111.  Power  of  national  bank  to  increase  capital  stock  .     .     .  158 

112.  Irregularity  in  executing  power  as  affecting  stockholdei's  160 

113.  Power  to  reduce  capital  stock 180 

114.  Reduction  of  capital  stock  in  England      ......  161 

115.  Power  to  issue  new  stock 161 

116.  Powers  as  to  special  stock 162 

117.  Power  to  issue  shares  at  discount 163 

118.  Power  to  issue  preferred  stock 164 

119.  Liability  on  itZ^j'a  Vires  issue  of  preferred  stock       .     .     .  165 

120.  Power  to  deal  in  own  stock 167 

121.  Power  to  purchase  stock  of  other  corporations  ....  169 

122.  Instances  where  power  denied 169 

123.  Power  of  foreign  corporation  to  purchase  stock  of  domes- 

tic company 171 

124.  Power  to  declare  dividends 171 

125.  Power  to  pledge  future  calls 172 

126.  Liability  on  dividends  declared 173 

127.  Liability  on  illegal  stock 174 

CHAPTER  IX. 

THE  DOCTRINE  APPLIED   TO   RAILROAD   CORPORATIONS. 

128.  General  power  to  make  contracts 175 

129.  Contracts  to  carry  beyond  own  line 176 

130.  Traffic  agreements  between  railroads 177 

131.  Pooling  contracts 178 

133.  Railroad  bonds  — Definition 180 

133.  Power  to  issue  bonds 181 

134.  Formalities  prescribed  must  be  strictly  pursued     .     .     .  181 
185.  Negotiability  of  railroad  bonds  ....;....  182 

136.  Power  to  guaranty  bonds  of  another  company  ....  183 

137.  Power  to  lease  road  and  franchises 184 

138.  Ultra  vires  lease  will  not  be  set  aside  at  suit  of  lessor     .  189 

139.  Instances  where  power  to  lease  denied 189 

140.  Power  to  mortgage  property 190 

141.  Power  to  mortgage  franchises 191 

142.  Consolidation  and  amalgamation  —  Definition.     .     .     .  193 

143.  Powers  of  corporations  to  consolidate 194 


XI 1  CONTENTS. 

Section.  Page. 

144.  Effect  of  consolidation 195 

145.  Effect  of  interstate  consolidation 108 

146.  Eights  and  liabilities  of  consolidated  company       .     .     .  199 

147.  Consolidation  as  affecting  stockholders 200 

148.  Consolidation  as  affecting  taxation i    .  202 

149.  Trusts  and  illegal  combinations 203 

CHAPTER  X. 

THE   DOCTEINE    IN   ITS    RELATION    TO    DIRECTORS    AND 
OTHER  OFFICERS  AND  AGENTS  OF  CORPORATIONS. 

150.  Introductory 207 

151.  Distinction  between  corporate  acts  and  unauthorized  acts 

of  directors 207 

152.  Test  to  distinguish  acts  of  directors  from  corporate  acts  209 

153.  Directors  as  trustees 210 

154.  General  powers  of  directors 211 

155.  Instances  of  directors'  powers 211 

156.  General  liability  of  directors 212 

157.  Power  of  bank  directors 213 

158.  Liability  of  bank  directors ,     .     .     .  214 

159.  Powers  and  liabilities  of  bank  president 215 

160.  Powers  and  duties  of  bank  cashier 218 

161.  Instances  of  cashier's  powers 217 

CHAPTEE  XL 

THE   DEFENSE   OF  ULTRA  VIRES  AS    TO  TORTIOUS  ACTS 
OF  OFFICERS  AND  AGENTS. 

162.  General  rule  as  to  liability  of  corporation  for  torts      .     .  219 

163.  Liability  for  tortious  acts  of  agent 221 

164.  Authority  of  agent  in  fixing  liability 223 

CHAPTEPv  XII. 

POWERS  AND  LIABILITIES  OF  FOREIGN  AND  DE  FACTO 
CORPORATIONS. 

165.  General  powers  of  foreign  corporations 225 

166.  The  absence  of  prohibitory  legislation  presumes  a  tacit 

adoption  of  foreign  laws 226 


CONTENTS.  XIU 

Section.  Page. 

167.  Contractual  powers  similar  to  domestic  corporations       .  227 

168.  De  facto  corporations  estopped  to  deny  corporate  exist- 

ence          227 

CHAPTER  XIII. 

THE  DOCTRINE  OF  ULTRA  VIRES  APPLIED  TO  MUNICIPAL 
CORPORATIONS. 

169.  Introductory  —  Nature  of  municipal  corporations  .     .     .  231 

170.  Exercise  of  municipal  powers 232 

171.  Ordinances  —  Power  to  enact 233 

172.  Nature  and  effect  of  ordinances 234 

173.  Ministerial  and  judicial  ordinances  distinguished  .     .     .  235 

174.  Effect  of  idtra  vires  ordinances 236 

175.  Instances  of  ultra  vires  ordinances 236 

176.  Ordinances  must  be  reasonable 237 

177.  Courts  cannot  interfere  with  discretion  of  municipality  239 

178.  Courts  may  restrain  passage  of  ultra  vires  ordinances      .  240 

179.  Powers  as  to  taxation 240 

180.  Power  to  tax  may  be  revoked 241 

181.  Power  can  be  exercised  only  for  public  purposes    .     .     .  242 

182.  Taxation  and  power  to  license  distinguished      ....  243 

183.  Power  to  exercise  right  of  eminent  domain 244 

184.  Distinction  between  eminent  domain  and  taxation     .     .  244 

185.  Powers  as  to  property 245 

186.  Powers  of  divided  municipality 247 

187.  Powers  of  extinguished  municipalities 248 

CHAPTER  XIY. 

GENERAL  POWERS  AS  TO  CONTRACTS. 

188.  Introductory  —  General  rule  as  to  contracts      ....  249 

189.  The  mode  prescribed  must  be  strictly  pursued  ....  252 

190.  Ultra  vires  contracts  by  officers 254 

191.  Implied  municipal  contracts 256 

192.  When  estoppel  not  applicable 257 

193.  When  estopped  to  deny  irregularity 258 

194.  Ratification  of  ultra  vires  contracts 258 

195.  Contracts  of  compromise  and  arbitration 259 

196.  Limitation  on  contracting  indebtedness 260 

197.  Instances  where  increase  denied 262 

198.  Equity  will  enjoin  illegal  creation  of  debt 2S3 


XIV  CONTENTS. 


CHAPTER  XV. 

PARTICULAR   POWERS   AND   LIABILITIES  OF  MUNICIPAL 

CORPORATIONS. 
Section.  Page. 

199.  Exclusive  control  over  streets 265 

200.  When  estopped  to  deny  existence  of  street 266 

201.  Power  to  grade  and  improve  streets 266 

202.  Discretionary  powers  as  to  improvement 268 

203.  Liability  for  consequential  damages 269 

204.  Liability  for  accidents  upon  streets 271 

205.  Instances  of  liability  for  defective  streets 273 

208.     Notice  to  authorities  required 274 

207.  Sewers  —  General  powers  as  to 275 

208.  Discretion  in  selecting  system 276 

209.  Duty  to  provide  sewer  outlet 277 

210.  City  not  insurer  of  condition  of  sewer 277 

211.  Liability  for  injury  from  defective  sewer 278 

213.     Power  to  abate  nuisances 279 

213.  Liability  as  to  nuisances 280 

214.  Powers  as  to  quarantine  regulations 283 

215.  Powers  as  to  public  wharves 283 

216.  Exclusive  privileges  to  gas  and  water  companies  .     .     .  284 

217.  Contracts  as  to  gas  and  water  supjjly 285 

218.  Power  to  regulate  rates 285 

219.  Liability  for  damages  owing  to  inadequate  water  supply  286 

230.     Doctrine  of  respondeat  superior 287 

221.     Distinction  between  public  gwasz-corporations  and  munic- 
ipal corporations 289 

233.    Not  liable  for  damages  arising  from  ultra  vires  acts  of 

officers 291 


CHAPTER  XVI. 

POWERS  AND  LIABILITIES  AS  TO  MUNICIPAL  SECURITIES. 

228.     Power  to  issue  bonds 295 

224.  Purposes  for  which  bonds  may  be  issued 296 

225.  Instances  where  power  denied 297 

226.  Formality  in  execution  as  affecting  liability      .     .     ...  298 

227.  Irregularity  as  affecting  liability 298 

238.     Effect  of  recitals  in  bonds 299 


INDEX.  XV 

Section.  Page. 

229.  Who  are  bona  fide  liolders 301 

230.  Power  to  issue  bonds  not  implied  from  power  to  borrow  .  303 

231.  Limitation  on  indebtedness  as  affecting  legality  of  bonds  303 

232.  Invalid  bonds  cannot  be  ratified 305 

283.  Liability  cannot  be  avoided  by  reorganization  ....  306 

234.  Liability  in  assumpsit  on  invalid  bonds 307 

235.  Illegal  issue  of  bonds  may  be  enjoined 308 

236.  Municipal-aid  bonds 309 

237.  Power  must  be  specially  granted 809 

238.  Power  to  subscribe  to  railroad  stock 311 

239.  Limitation  on  amount  of  subscription 312 

240.  Levying  tax  to  pay  subscription 313 


TABLE  OF  CASES  CITED. 


References  are  to  sections. 


A. 

Abbey,  Metropolitan  Concert  Co. 

v.,  139. 
Abbott,  Elliott  v.,  160,  161. 
Abbott  V.  Johnstown,  etc.  R.  Co., 

137. 
Abbott  V.  Omaha  Smelting  Co.,  3. 
Abbott  V.  Packet  Co.,  70. 
Abbott,  Society,  etc.  v.,  107. 
Abbott,   Thompson  v.,   144,   146, 

186.  188. 
Abel,  March  v.,  71. 
Aberdeen,  State  Board  v.,  191. 
Aberdeen  R.  Co.  v.  Blaikie,  153. 
Academy,  Moss  v.,  96. 
Academy  of  Music  v.  Flanders 

Bros.,  168. 
Ackerman  v.  Halsey,  158. 
Acres,  Lake  Erie  R."  Co.  v.,  163. 
Adams,  Anthony  v.,  213,  223. 
Adams  v.  Farnsworth,  191. 
Adams,  Haven  v.,  87. 
Adams,  Tash  v.,  175, 
Adams,  Valparaiso  v.,  203. 
Adams  Co.,  Quincy  Bridge  Co.  v., 

145. 
Adams  Express  Co.  v.  Wilson,  129. 
Addlestone  Co.,  In  re,  117. 
Adriance  v.  Roome,  52. 
^tna  Bank  v.  Charter  Oak  Ins. 

Co.,  9,  136. 
JEtna  Ins.  Co.,  Middleport  v.,  240. 
Agar  V.  Insurance  Co.,  160. 
Agnew  V.  Brail,  195. 
Agricultural  Association,  Taylor 

v.,  96. 
Aicardi  v.  State,  8. 
Akron,  McCombs  v.,  220. 


Alabama,  etc.  Co.  v.  Central  As- 
sociation, 70,  96. 

Alabama  R.  Co.,  Jordon  v.,  162. 

Alabama  R.  Co.  v.  Smith,  53. 

Alabama  R.  Co.,  Waddill  v.,  53. 

Albany,  People  v.,  212. 

Albany  Co.,  Laramie  Co.  v.,  86. 

Albert  Association  Co.,  In  re,  137. 

Albert  Lea,  Graham  v.,  205. 

Albright  v.  Town  Council,  188. 

Alden  V.  Minneapolis,  203. 

Aldrich,  Lumbard  v.,  81. 

Aldrich  v.  Tripp,  222. 

Alers,  Sherwood  v.,  70. 

Alexander  v.  Brown,  77. 

Alexander  v.  Cauldwell,  154,  194. 

Alexander,  Mathews  v.,  173. 

Alexander  v.  O'Donnell,  69. 

Alexander  v.  Relfe,  163. 

Alexander,  Richmond  Factory 
Co.  v.,  3. 

Alexander  v.  Tolleston  Club,  81. 

Allegheny  City,  Amey  v.,  239. 

Allegheny  City  v.  McClurkan,  70, 
74. 

Allen,  Camden  v.,  224. 

Allen,  Chouteau  v.,  105,  194. 

Allen  V.  Galveston,  170. 

Allen  V.  Herrick,  127. 

Allen  V.  Inhabitants,  etc.,  224 

Allen  V.  Joy.  181,  225. 

Allen  V.  Lafayette,  233. 

Allen,  Page  v.,  198. 

Allen,  Phillips  v.,  212. 

Allerton,  Railway  Co.  v.,  109,  110. 

Alley  V.  Inhabitants,  etc.,  170. 

Allison,  Bank  of  Hindustan  v., 
127. 

Allison  V.  Railroad  Co.,  235. 


XVlll 


TABLE    OF   CASES   CITED. 


References  are  to  sections. 


Almada  &  Tirito  Co.,  In  re,  117. 
Almy,  Salem  Nat.  Bank  v..  51, 168. 
Alton.  Sturtevant  v.,  188,  201. 
AWis,  Sheward  v.,  53,  70. 
American  Academy  v.  Howard, 

94. 
American  Com.  Co.  v.  Humboldt 

M.  Co.,  136. 
American  Ins.  Co.,  Judah  v.,  14. 
Americian  Ins.   Co.,  Miller  v.,  74. 
American  Preserves  Trust  v.  Man- 
ufacturing Co..  69,  148. 
American  Tube  Works  v.  Boston 

Mach.  Co.,  116. 
American,  etc.  Soc,  Wade  v.,  92. 
American,  etc.  Union  v.  Yount, 

81. 
Amery,  Rex  v.,  3. 
Ames,  British  Am.  Land  Co.  v., 

166. 
Amey  v.  Allegheny  City,  239. 
Amherst.  Merrick  v.,  225. 
Ammon,  Miller  v.,  69. 
Amy,  Pendleton  v.,  227. 
Amy,  St.  Joseph  Township  v.,  227. 
Anderson,  Bliss  v.,  53. 
Anderson  v.  City,  175. 
Anderson,  Smith  v.,  153. 
Anderson  v.  Township  of  Santa 

Ana,  238. 
Andover,  Gassett  v.,  191. 
Andover  v.  Grafton,  230. 
Andover,  Jenkins  v.,  224. 
Andreas,  Craig  v.,  69. 
Androscoggin  R.  Co.  v.  Auburn 

Bank,'  105. 
Androscoggin   R.  Co.,  Evansville 

R.  Co.''  v..  129. 
Anglo-Cal.  Bank,  Mahoney  Min. 

Co.  v.,  96,  98. 
Anita,  Davis  v.,  176. 
Anthony  v,  Adams,  213,  222. 
Anthony  v.  County  of  Jasper,  226. 
Anthony  v.  Household  Mach.  Co., 

110. 
Appeal  of  City  of  Erie,  196,  197. 
Appleton,  Hayes  v.,  170. 
Archer  v.  Terre  Haute  R.  Co.,  9. 
Ardesco  Oil  Co.  v.  N.  A.  Min.  Co., 

83,  91. 
Argenti  v.  San  Francisco,  188, 190, 

191,  192. 
Arkansas,  Curran  v.,  107. 


Armstrong,  Beaver  v.,  135. 
Armstrong  v.  Brunswick,  213, 313. 
Armstrong,  St.  Louis  v.,  194. 
Armstrong,  Winters  v.,  109,  111. 
Arn  V.  City  of  Kansas,  211. 
Arnot  V.  Erie  R.  Co.,  129,  136. 
Arrighi,  Jefferson  Co.  v.,  194. 
Arthur  v.  Bank,  91. 
Arthur  v.  Griswold,  158. 
Ash.  Conservators  v.,  3. 
Ashbury,  Glass  v.,  170. 
Ashbury  Ry.  Co.  v.  Riche,  41,  42, 

43,  44,  45,  52.  53,  72,  78, 137. 
Ashley  v.  Port  Huron,  211. 
Ashton-under-Lynn,  Bateman  v., 

70. 
Ashville  Division,  etc.  v.  Aston, 

81. 
Aspinwall,  Eaton  v.,  106. 
Aspinwall,  Knox  Co.  v.,  135,  190, 

193,  227,  228. 
Aspinwall  v.  Sacchi,  106. 
Assurance  Co.,  In  re,  168. 
Aston,  Ashville  Div.  etc.  v.,  81. 
Atchison,  etc.  R.  Co.  v.  Commis- 
sioners, 146. 
Atchison,  etc.  R.  Co.  v.  Denver, 

etc.  Co.,  131. 
Atchison,  etc.  R.  Co.  v.  Fletcher, 

136. 
Athena3um,  etc.  Co.  v.  Tooley,  74. 
Athens  City  Water  Works,  Fow- 
ler v.,  217. 
Atkinson  v. Marietta, etc.  R.  Co., 9. 
Atlanta,  Cooper  v..  222. 
Atlanta,  FuUa  v.,  203. 
Atlanta,  Wells  v.,  177,  188,  217. 
Atlantic,  etc.  R.  Co.  v.  State,  144. 
Atlantic  Citv  Water   Works   v. 

Atlantic'^City,  216,  217. 
Atlas  Bank  v.  Nahant  Bank,  74. 
Attorney-General  v.  Boston,  145. 
Attorney-General  v.  Great  East- 
ern Ry..  42,  43,  44,  47. 
Attornev-General    v.    Insurance 

Co.,'l00. 
Attorney-General  v.  Stevens,  168. 
Attorney-General  v.  Wilson,  153. 
Atwater.  First  Cong.   Soc.  v.,  92. 
Atwood.  De  Camp  v.,  91. 
Aubert  v.  Walsh,  69. 
Auburn  Bank,  Androscoggin  R- 
Co.  v.,  105. 


TABLE    OF   CASES    CITED. 


XIX 


References  are  to  sections. 


Auburn  Plank  Road  Co.  v.  Doug- 
las. 8. 

Augusta,  Walsh  v.,  196. 

Augusta,  Williams  v..  213. 

Augusta.  Wright  v.,  219. 

Auerhach  v.  Le  Sueur  Mill  Co.,  81, 
100. 

Aukland  v.  Westminster  Board, 
53. 

Aurora  v.  Cobshire,  200. 

Aurora,  Faulkner  v.,  204. 

Aurora  v.  West.  135,  237. 

Aurora  Agl.  Soc.  v.  Paddock,  77, 84. 

Austin,  Berrick  v.,  161, 

Austin,  Doyle  v.,  181. 

Austin  V.  Mundy,  175. 

Australian,  etc.  Co.  v.  Mounsey, 
96,  98. 

Averhill,  Moss  v.,  56,  100. 

Averhiil,  Rochester  Sav.  Bank 
v.,  9. 

B. 

Backman  v.  Charleston,  194. 

Bacon,  Holt  v.,  161. 

Badger  v.  Bank,  160,  161. 

Badger.  Partridge  v.,  83.  96,   100. 

Bagshaw  v.  Eastern  Counties  Rv. 
Co.,  53. 

Bagshaw  v.  Eastern  Union  Ry. 
Co.,  9,  70. 

Bailey  v.  M.  E.  Church,  53. 

Bailey,  Padrick  v.,  176. 

Bailey,  State  v.,  142,  143,  147. 

Baird  v.  Bank.  81. 

Baker  v.  Boston.  222. 

Baker,  City  of  Madison  v.,  211. 

Baker,  Dixon  v.,  211. 

Baker,  Niagara  County  Bank  v., 
103. 

Baker,  Shawneetown  v.,  195. 

Baker,  Whitman  M.  Co.  v.,  47,  81. 

Bakersfield  Association  y.  Ches- 
ter. 51,  168. 

Baldwin,  Farmers'  &  M.  Bank  v., 
103. 

Balfour  v.  Ernest.  148. 

Ball,  Savage  t.,  100. 

Ballard,  Bradley  v..  58,  96. 

Ballou,  Litchfield  v.,  233. 

Ballston  Bank  v.  Marine  Bank, 
161. 


Baltimore  v.  Baltimore,  etc.  Co., 
47. 

Baltimore  v.  Eschbach,  190,  201, 
222. 

Baltimore  v.  Gill,  196,  198. 

Baltimore,  Horn  v.,  201. 

Baltimore  v.  Mu'Jigrove,  190. 

Baltimore  v.  Radicke,  176,  178. 

Baltimore,  etc.  R.  Co.  v.  Glenn, 
166. 

Baltimore,  etc.  R.  Co.,  Mayor,  etc. 
v.,  128. 

Baltimore,  etc.  R.  Co.  v.  Schu- 
macher, 129. 

Bangor,  Darling  v.,  202. 

Bangor,  Smith  v.,  205. 

Bangor  Savings  Bank  v.  Still- 
water, 233. 

Bangor  &  Slate  Co.,  In  re,  118. 

Banigan,  Bard  v.,  119. 

Bank,  Arthur  v.,  91. 

Bank,  Badger  v.,  160,  161. 

Bank,  Baird  v.,  81. 

Bank  v.  Bruce,  120. 

Bank  v.  Chillicothe,  96. 

Bank  v.  Colby.  144. 

Bank,  County  of  Moultrie  v.,  197.. 

Bank,  Dabney  v.,  91. 

Bank,  Dana  v.,  87. 

Bank,  Dater  v.,  83. 

Bank,  Farmers'  &  M.  Bank  v.,  160. 

Bank,  Godbold  v.,  156. 

Bank  v.  Haskill,  161. 

Bank,  Jones  v.,  168. 

Bank,  Lloyd  v.,  160. 

Bank,  Louisville  v..  215. 

Bank,  Mackay  v.,  162. 

Bank,  McDonough  v.,  79. 

Bank,  Merrick  v.,  91. 

Bank.  Minor  v..  160. 

Bank,  Norton  v.,  74. 

Bank,  People  v.,  170. 

Bank,  Pomeroy  v.,  144 

Bank,  Potter  v.,  100. 

Bank,  Reese  v.,  124. 

Bank,  Ridgeway  v.,  96,  100. 

Bank  v.  St.  John,  156. 

Bank,  St.  Louis  v.,  171. 

Bank,  Smith  v.,  161. 

Bank,  Spohr  v.,  168. 

Bank,  State  v.,  83. 

Bank,  Sturges  v.,  161. 

Bank  v.  Transportation  Co.,  120» 


XX 


TABLE    OF    CASES    CITED. 


Eeferences  are  to  sections. 


Bank,  Union  M.  Co.  v.,  96. 

Bank,  Wild  v.,  IGO. 

Bank,  Williams  v.,  74, 

Bank  of  Augusta  v.  Earle,  8, 9,  26. 

28,  47,  52,  103,  156,   157,  165, 

167. 
Bank  of  Australasia  v.  Breillat, 

96,  98. 
Bank  of  British  Columbia,  Wil- 
lamette v.,  9,  58. 
Bank    of   Columbia,    Mechanics' 

Bank  v.,  161. 
Bank  of  Columbia  v.  Paterson,  76, 

77,  188. 
Bank  of  England,  Coles  v.,  124.  _ 
Bank    of   Gennessee   v.  Patchin 

Bank,  9. 
Bank   of  Hindustan  v.  Allison, 

127. 
Bank  of  Hindustan,  In  re,  143. 
Bank  of  Kentucky,  Lewis  v.,  167. 
Bank  of  Kentucky  v.  Schuylkill 

Bank,  79,  160. 
Bank  of  Lyons  v.  Demon.  77. 
Bank  of  Maryland,  State  v.,  100. 
Bank  of  Michigan  v.  Niles,  81, 85. 
Bank  of  Pennsylvania  v.  Comni.. 

8,  9,  12. 
Bank  of  Pennsylvania   v.  Reed, 

161. 
Bank  of  St.  Paul  v.  Dapa,  14. 
Bank  of  Sonoma  County  v.  Fair- 
banks. 225. 
Bank  of  United  States  v.  Dand- 

ridge,  13,  24,  28,  50,  76,  151, 

1,54,  157,  160. 
Bank  of  United  States  v.  Fleck- 

ner,  21,  77,  103,  160. 
Bank  of  United  States  v.  Owens, 

69. 
Bank   of  Virgennes  v.  Warren, 

160. 
Banking  Co.  v.  Jersey  City,  178. 
Banking  Co..  Leggett  v.,  84. 
Banks  v.  Poitiaux,  83. 
Baptist  Society,  Chambers  v.,  94. 
Barber,  Erie  Co.  Iron  Works  v., 

162. 
Barber,  Montgomery  Co.  v.,  188. 
Barber  Asi)halt  Pav.  Co.  v.  Go- 

greve,  189. 
Barber  Asphalt  Pav.  Co.  v.  Hunt, 

189. 


Barbour  v.  Ellsworth,  323. 
Barclay  Coal  Co.,  Morris  R.  Co. 

v..  13!. 
Bard  v.  Banigan,  119. 
Bard  v.  Poole,  166,  167. 
Barker  v.  Hoff,  69. 
Barker  v.  Insurance  Co.,  100. 
Barker  District    v.   Valley  Dis- 
trict, 186. 
Barlow,  Whitney  Arms  Co.  v.,  55, 

56,  58.  61,  63,  64,  66,  68. 
Barnes  v.  District  of  Columbia, 

220. 
Barnes  v.  Lacon,  237. 
Barnes  v.  Ontario  Bank,  96,  98, 

160,  161. 
Barnett  v.  Denison,  239. 
Barney,  Frothingham  v.,  133. 
Baroness  Wenlock  v  River  Dee, 

44. 
Barr  v.  City  of  Kansas,  204. 
Barr,  Hatch  v.,  87,  90. 
Barrington  v.  Neuse  River,  86. 
Barritt  v.  New  Haven,  203. 
Bari'ow,  etc.  Co.,  In  re,  114. 
Barry   v.  Merchants'  Exchange, 

27,  83,  84,  96,  100,  106,  124. 
Bartholomew,  etc.  Co.  v.  Beatty, 

168. 
Bartlett,    Spring    Valley  Water 

Works  v.,  335. 
Bartlett  v.  Viner,  55. 
Barwick  v.  English,  etc.  Bank, 

162. 
Bass,  White  v.,  69. 
Bassett,  Granger  v.,  124,  126. 
Bassett,  Holbrook  v.,  96. 
Batelle  v.  Northwestern  Cement 

Co.,  79. 
Bateman  v.  Ashton-under-Lynn, 

70. 
Bateman,  City  Bank  v.,  77. 
Bateman  v.  Covington,  215. 
Bateman  v.  Mayor,  50. 188. 
Bates,  Savings  Bank  v.,  91. 
Bates  County  v.  Winter,  190. 
Bauerle,  Wilkinson  v.,  91. 
Baumgartner  v.  Hast}',  212. 
Bay  St.  Louis,  Chandler  v.,  230. 
Bayonne,  Paret  v..  195. 
Beach  v.  Fulton  Bank,  25. 
Beacher,  Tyler  v.,  181. 
Beale,  Robinson  v.,  130. 


TABLE    OF   CASES    CITED. 


XXI 


References  are  to  sections. 


Bean  v.  Joy.  195. 
Bear  River  Co.,  Blen  v.,  194. 
Bear  River  Co.,  Shaver  v.,  77. 
Bearden  v.  Madison,  172. 
Beardstown,  etc.  R.  Co.  v.  Met- 

calf,  84. 
Beasley,  Mayor,  etc.  v.,  176. 
Beatty  v.  Bartholomew,  etc.  Co., 

168. 
Beatty  v.  Insurance  Co.,  47. 
Beaty  v.  Knowler,  8,  12,  47. 
Beaufort  Co.,   Satterthwaite   v., 

177. 
Beaver  v.  Armstrong,  135. 
Becker  v.  Keokuk  Water  Works, 

219. 
Beckwith,  Mount  Pleasant  v.,  186, 

187. 
Beckwith,  Winslow  Mfg.  Co.  v., 

88. 
Beecher,  Tyler  v.,  225. 
Beekman  v.  Saratoga  Ry.  Co.,  86. 
Beers  v.  Phoenix  Glass  Co.,  96, 160. 
Belding  v.  Pitkin,  69. 
Bell,  State  v.,  173. 
Bell,  Weir  v.,  158. 
Bell  Tel.  Co.,  St.  Louis  v..  170. 
Bell's  Gap  Ry.  Co.  v.  Christy,  79. 
Bellamy  Mfg.  Co.,  Dispatch  Co.  v., 

77.     - 
Belleville,  St.  Louis,  etc.  Co.  t.,  192. 
Bellevue,  Town  of  Depere  v.,  186. 
Bellmeyer  v.  Marshalltown,  9. 
Belmont  v.  Erie  Ry.  Co.,  53. 
Belmont,  Frost  v.,  79. 
Beman  v.  Rufford,  137. 
Bennett  v.  Filyaw,  129. 
Bennett  v.  Peninsular  S.  Co.,  129. 
Bennett,  Watson  v.,  161. 
Bennington  Ins.  Co.,  Isham  v.,  90. 
Benson  v.  Heathorn,  153. 
Bentley  v.  County  Commission- 
ers, 170. 
Bentz,  St.  Louis  v.,  212. 
Bergen  v.  Clarkson,  173,  174. 
Bergen  v.  Fishing  Co.,  91. 
Bei'gen  County,  Merchants'  Bank 

v.,  226,  229. 
Bergman  v.  St.  Paul,  etc.  Ass'n, 

53. 
Bernal,  Parker  v.,  122. 
Bernerly,  Trumpler  v.,  86. 
Berrick  v.  Austin,  161. 


Berry,  New  Decatur  v.,  214 

Berry,  Pneumatic  Gas  Co.  v.,  76. 

Berry,  Railroad  Co.  v.,  144. 

Berry  v.  Yates,  121. 

Bever,  Clark  v.,  115. 

Severs,  State  v.,  190. 

Bigelow  V.  Randolph,  219. 

Bigler  v.  Mayor,  etc.,  189. 

Bill  V.  Western  Union  Tel.  Co., 

139. 
Billings,  Providence  Bank  v.,  8. 
Binney's  Case,  83. 
Biscoe,  Ringas  v.,  91. 
Bishmeyer  v.  Evansville,  219. 
Birch  v.  Cropper.  117. 
Bird  v.  Bird's  Pat.  Co.,  33,  78. 
Birkshire,  etc.  R.  Co.,  Winchester 

v.,  137. 
Birmingham  Gas  Co.,  Smith  v., 

162. 
Birmington  v.  Wallis,  69. 
Bishop  V.  Brainerd,  143. 
Bishop  V.  Centralia,  200. 
Bishop,  Wright  v.,  235. 
Bissell,  Blanchard  v.,  171. 
Bissell  V.  Jeffersonville,  19-^. 
Bissell  V,  Kankakee,  181,  2^:5. 
Bissell  V.  Mich.  S.  R.  Co.,  31,  38, 

55,  61. 
Bissell   V.   Spring  Valley  Town- 
ship,,226. 
Black  V.  Columbia,  219. 
Black  V.  Delaware  Canal  Co.,  53, 

70,  72,  137,  143. 
Black  V.  United  Companies,  8. 
Blackburne  v.  Selma,  etc.  R.  Co., 

81. 
Blackburne   Bldg.   Soc.   v.   Cun- 

liflfe,  etc.  Co..  96,  97. 
Blackshire  v.  Homestead,  87. 
Blackstone  Canal,  Farnum  v.,  96. 
Blaikie,  Aberdeen  R.  Co.  v.,  153. 
Blair,  Fogg  v.,  115. 
Blair  v.  Insurance  Co.,  100. 
Blake,  Great  Western  R   Co.  v., 

129. 
Blake  v.  Mayor,  170. 
Blalock  V.  Kernesville  Mfg.  Co., 

120. 
Blanchard  v.  Bissell,  171. 
Blanchard's  Factory  v.  Warner, 

81. 
Bland,  Robinson  v.,  75. 


XXll 


TABLE    OF   CASES   CITED. 


References  are  to  sections. 


Blanke,  Egmann  v.,  120. 
Blasdell  v.  Fowler,  69. 
Blazier  v.  Miller,  117. 
Blen  V.  Bear  River  Co.,  194 
Bliss  V.  Anderson,  53. 
Bloodgood,  Utica  Ins.  Co.  v.,  75. 
Bloom,  Slee  v.,  107. 
Bloom  V.  Xenia,  170. 
Blunt  V.  Walker,  81. 
Board,  etc.,  McDermott  v.,  172. 
Board  of  Commerce  v.  Legg,  210. 
Board  of  Education  v.  State,  225. 
Boardman  v.  Hayne.  190. 
Boardman  v.  Lake  Shore  R.  Co., 

124. 
Boflinger,  St.  Louis  v.,  177. 
BogarduR  v.  Trinity  Church,  81. 
Bolles,  Commissioners  v.,  238. 
Bolton  V.  San  Antonio,  235. 
Bond,  Crawfordsville  v.,  209. 
Boney,  Louisville,  etc.  R.  Co.  v., 

146. 
Bonham,  Susquehanna  Canal  Co. 

v.,  141. 
Bonner  v.  New  Orleans,  135. 
Boogher  v.  Life  Association,  162. 
Boom  Co.  V.  Paterson,  86,  183. 
Boonville,  Hunt  v.,  203. 
Booth  V.  Robinson,  96,  98,  122. 
Bornham,  Canal  Co.  v.,  15. 
Borough,  etc.  v.  Fitzpatrick,  204. 
Borough  of  Reading,   Gi'een  v., 

203. 
Bornman,  Penn  v.,  69. 
Boston,  Attornev-General  v.,  145. 
Boston,  Baker  v",  222, 
Boston,  Brimmer  v.,  215. 
Boston,  Burrill  v.,  190. 
Boston,  Cavanagh  v.,  183,  212. 
Boston,  Child  v.,  208. 
Boston,  Dingley  v.,  212. 
Boston,  Fisher  v.,  219. 
Boston,  Hill  v.,   219. 
Boston,   Lowell   v.,  69,   179,    181, 

225. 
Boston,  Nason  v.,  205. 
Boston,  Shaw  v.,  176. 
Boston,  Thayer  v..  162,  222. 
Boston     Association,     Roylston 

Market  v.,  170. 
Boston  Carpet  Co.,  Howe  v.,  122. 
Boston  Mach.  Co.,  American  Tube 

Works  v.,  110,  127. 


Boston,  etc.  R.  Co.  v.  B.  &  M  Ry. 

Co.,  8. 
Boston,  etc.  R.  Co.,  Lightner  v., 

146. 
Boston,  etc.  R.  Co.,  Middlesex  R. 

Co.  v.,  137. 
Boston,  etc.  R.  Co.  v.  New  York, 

etc.  Co.,  137. 
Boston,  etc.  R.  Co.,  State  v.,  81. 
Boston,  etc.  R.  Co.,  Troy,  etc.  R. 

Co.  v.,  9. 
Boston  Water  Power  Co.,  Dupee 

v.,  83. 
Bostwick,  Brinkerhoff  v.,  156, 108. 
Boscwick.  Fishkill  Sav.  Inst,  v., 

77. 
Bott  V.  Pratt,  172. 
Boucher  v.  New  Haven,  205. 
Boulton  V.  Crowther,  203. 
Bound  V.  Wisconsin  Cent.  R.  Co., 

197,  235. 
Bousquet,  Huthsing  v.,  190, 
Bower,  Corgill  v.,  158. 
Bowes,  Patterson  v.,  198. 
Bowman,  Eidman  v.,  110. 
Bowman,  Insurance  Co.  v.,  101. 
Bowman.  Jackson  v.,  215. 
Boyce  v.  Montauk  Gas  Co.,  52. 
Bovce,  Wheeler  Mfg.  Co.  v.,  168. 
Bradford,  Grant  Co.  v.,  175. 
Bradford  v.  Mayor,  204,  206. 
Bradley  v.  Ballard,  58,  96. 
Bradley  v.  New  York,  etc.  Co.,  8. 
Bradley  v.  South  Carolina  Phos. 

Co.,  8. 
Bradsall  v.  Clark,  173. 
Brady  v.  Mayor,  70,  189,  190,  194, 

201. 
Brainerd,  Bishop  v.,  143. 
Brainerd,  Moore  v.,  129. 
Brainerd,   New  London   v.,   170, 

175. 
Brainerd  v.  Railroad  Co.,  135. 
Brail,  Agnew  v.,  195. 
Branch  v.  Charleston,  148. 
Branch  v.  Jessup,  9,  53,  137. 
Branch,  Tomlinson  v.,  146,  148. 
Brandow,  Dutch  Church  v.,  95. 
Brannen  v.  Loving,  1.59. 
Breillat.  Bank  of  Australasia  v., 

96,  98. 
Bremond,  International  R.  Co.  v., 

143. 


TABLE    OF    CASES    CITED. 


XXIU 


References  are  to  sections. 


Brenham  v.  German  Am.  Bank, 

224,  230. 
Brenbam  v.  Water  Co.,  170, 188. 
Brewer  Brick  Co.  v.  Brewer,  181. 
Briant,  McCoy  v.,  170. 
Briilenbecker  v.  Lowell,  161. 
Bridge  Co.,  East  Hartford  v.,  199. 
Bridge  Co.  v.  Frankfort,  191. 
Bridge  Co.  v.  Land  &  Imp.  Co.,  8. 
Bridge  Co.  v.  Metz,  145. 
Bridge  Proprietors  v.  Hoboken,  8. 
Bridgeport,  Davidson  v.,  77. 
Bridgeport,  Gregory  v.,  188. 
Bridgeport  v.  Railroad  Co.,  170, 

177,  201. 
Bridgeport  Hydraulic  Co.,  Nick- 

erson  v.,  219. 
Bridgewater  Nav.  Co.,  In  re,  119, 
Brieswick  v.  Mayor,  etc.,  171. 
Briggs,  Buckley  v.,  100. 
Briggs  V.  Cape  Cod  Canal  Co.,  168. 
Briggs,  Cbicago  &  A.  Ry.  Co.  v.,  8. 
Briggs  V.  Penniman,  107. 
Briggs  V.  Spaulding,  154,  156,  157, 

158. 
Brigbam,  Caine  v.,  100. 
Brigbton,  People  v.,  86. 
Brimmer  v.  Boston,  215. 
Brinkerboflf  v.  Bostwick,  156,  158. 
Brintnall  v.  Railroad  Co.,  129. 
Brisbam  v.  Delaware,  etc.  R.  Co., 

126. 
Bristol  V.  Newchester,  186. 
Britisb  Am.  Land  Co.  v.  Ames, 

166. 
Britisb    Cast-Plate    Co.  v.  Mere- 

ditb,  203. 
Britisb  Life  Ins.  Co.,  In  re,  122. 
Briton,  Police  Jury  v.,  100,  223, 

237. 
Broadway  Bank,  Lionberger  v., 

91. 
Broadway  Co.  v.  Hankey,  216. 
Broburg  v.  Des  Moines,  205. 
Brockport,  West  v.,  219. 
Brode  v.  Insurance  Co.,  100. 
Brodbead  v.  Milwaukee,  225. 
Brokaw  v.  New  Jersey  R.  Co.,  162, 

164. 
Bromley,  Smitb  v.,  69. 
Bronson  v.  La  Crosse  R.  Co.,  53. 
Bronson,  Oberlin  v.,  175. 
irookfield,  Cheeney  v.,  190. 


Brooklyn  v.  City  R.  R.,  215. 
Brooklyn,  Mills  y.,  202,  208. 
Brookl3'n  G.  R.  Co.  v.  Slaughter, 

9,  50. 
Brooklyn  R.  Co.,  Stewart  v.,  163. 
Brooks,  Claiborne  Co.  y.,  223,  237. 
Brougbton  v.  Pensacola,  233. 
Brougbton,  Water  Co.  y.,  50. 
Brown,  Alexander  y.,  77. 
Brown,  Duke  y.,  229. 
Brown,  Eastern  R.  Co.  v.,  162. 
Brown,  Jackson  y.,  84,  85. 
Brown,  Joint-stock    Co.    v.,    132, 

158. 
Brown  v.  Lebigh  Canal  Co.,  124. 
Brown  v.  Mayor,  194. 
Brown,  Parkersburg  v.,   74,  181, 

224. 
Brown,  Shrewsbury  y.,  191. 
Brown,  State  y.,  185. 
Brown,  Steamboat  Co.  v.,  129. 
Brown,  Townsend  y.,  8. 
Brown,  Tuckerman  y.,  108. 
Brown  y.  Vinalbaven,  213. 
Browning  y.  Owen  Co.,  222. 
Brownlee,  Casbman  v.,  146. 
Bruce.  Bank  y.,  120. 
Bruffett  y.  Great  Western  R.  Co., 

146. 
Brunswick,   Armstrong    v.,   212, 

213. 
Brunswick  G.  L.  Co.  y.  United 

Gas  Co.,  137. 
Bryan  v.  Cbicago.  etc.  R.  Co.,  163, 
Bryan  y.  M.  &  P.  R.  Co.,  129. 
Bryan  y.  Page,  191,  194. 
Bryson  v.  Philadelpbia,  215. 
Buchanan  y.  Litchfield,  196,  224, 

228,  232. 
Buck,  Logan  City  y.,  170. 
Buckeye  IBrewing  Co.,  Easum  v., 

122. 
Buckeye  Marble  Co.  v.  Harvey, 

72,  74,  123. 
Buckley  v.  Briggs,  100. 
Buckley  v.  Prescott,  205. 
Buena   Vista   Co.,  Carpenter  v., 

228. 
Buffalo,  Hodges  v.,  194. 
Buffalo,  Ketchum  v.,  100,  185, 188, 
Buffalo,  La  Couteulx,  185. 
Buffalo  Ins.  Co.,  Webster  v.,  53, 
Buffalo  Oil  Co.  v.  Oil  Co.,  162. 


XXIV 


TABLE    OF   CASES    CITED. 


References  are  to  sections. 


Buffalo  R.  R  Co.,  Soper  v.,  154. 
Buffit  V.  Troy,  etc.  R.  Co.,  13,  128. 
Buford  V.  Grand  Rapids,  311. 
Buford  V.  Keokuk  Pack.  Co.,  83, 

121. 
Buhl,  Richardson  v.,  148. 
Building  Association.  Franz  v., 

168. 
Building  Association,  Massey  v., 

101. 
Bullions.  Robertson  v.,  93. 
Buroh,  Miller  v.,  213. 
Burke.  New  Albany  v.,  115. 
Burlington,  French  v.,  196. 
Burlington,  Mills  Co.  v..  195. 
Burlington,  Rogers  v.,  235. 
Burlington,  Starr  v.,  173. 
Burlington,  etc.  R,  Co.,  Miller  v., 

163,  164. 
Burmeister  v.  Howard,  173. 
Burnham  v.  Webster,  160. 
Burnham,  Wells  v.,  189. 
Burr  V.  Glass  Co.,  83,  100. 
Burr  V.  McDonald,  88,  96. 
Burrill  v.  Boston,  190. 
Burroughs  v.  Railroad  Co.,  139. 
Burt  V.  Rattle,  84,  119. 
Burton's  A]>peal,  83,  87. 
Butchers'  Bank  v.  McDonald,  168. 
Butler,  Lexington  v.,  328, 
Butts  V.  Cuthberson,  100. 
Byrnes  v.  Cohoes,  209,  211. 
Byrnes,  Hutchins  v.,  87,  90. 
Byron,  Metropolitan  Co.,  98. 

0. 

Cabanniss.  Danielly  v.,  177,  335. 
Cabot  V.  Rome,  188,  317, 
Cadwell,  Utica  Ins.  Co.  v.,  75. 
Cahous,  Sewell  v.,  200. 
Caine  v.  Brigham,  100. 
Calais,  Woodcock  v.,  213. 
Caldwell,  Louisville,  etc,  R  Co. 

v.,  100. 
Caledonia  R.  Co.  v.  Helensburg, 

70,  79. 
Calhoun,  Kelly  v.,  89. 
California  Pac.  R.  Co.  v.  Low,  136. 
Callenday  v.  Marsh,  203. 
Calloway  Min.  Co.  v.  Clark,  81. 
Camden  v.  Allen,  224. 


Camden,  Miss.  etc.  R  Co.  v.,  237. 
Camden  v.  Mulford,  173,  174 
Camden,  Simmons  v.,  203. 
Camden,  etc.  R.  Co.,  Elkins  v,,  131, 

155. 
Camden,  etc,  R.  Co,  v.  Forsyth, 

139. 
Camden,  etc.  R.  Co,  v.  May's  Land- 
ing R.  Co.,  137, 
Cameron,  Chicago  v,,  53, 
Cameron,  Mathes  v.,  280. 
Campbell  v.  Marietta  R  Co.,  137. 
Campbell  v,  Montgomery,  202, 220, 
Campbell.  Nebraska  v„  330. 
Campbell's  Case,  137,  147. 
Canaan,  Coates  v„  300. 
Canal  Commissioners,  Penn.  Ry. 

v.,  8,  13, 
Canal  Co.,  Black  v.,  143. 
Canal  Co.  v.  Borham,  15. 
Canal  Co.,  Briggs  v.,  168. 
Canal  Co.,  Conant  v.,  77. 
Canal  Co.,  Farnum  v.,  145, 
Canal  Co.  v.  Fulton  Bank,  143, 

148, 
Canal  Co.,  Gue  v.,  141. 
Canal  Co.  v,  Parnably,  330, 
Canal  Co,  v.  Valette,  83,  91,  96, 

100. 
Canal,  etc.  R.  Co.  v,  St,  Charles 

R,  Co.,  53, 
Canney,  Ossepee  Mfg,  Co,  v.,  74, 

75,  81, 
Canton,  Leonard  v,,  170. 
Canton  v.  Nist,  173, 
Canton  Masonic  Society,  Rock- 
hold  V,,  7, 
Cape  Cod  Canal  Co,,  Briggs  v., 

168. 
Cape  May,  Green  v.,  170,  194 
Capitol  Bank,  Pope  v.,  103. 
Capitol  City  Water  Co.  v,  Mont- 

gomer}%  217. 
Carey  v.  East  Saginaw,  74. 
Carey,  Ottawa  v.,  170,  225. 
Carey,  Perin  v.,  93,  185. 
Carondelet,  Taylor  v.,  212. 
Carpenter  v.  Buena  Vista    Co,, 

228. 
Carpentier,  Oakland  v,,  215, 
Carr  v,  Le  Fevre,  135. 
Carr  v.  Northern  Liberties,  203,. 

203. 


TABLE    OF   CASES    CITED. 


XXV 


References  are  to  sections. 


Carr  v.  Rogers,  61. 
Carr,  Sherman  v.,  170. 
Carroll  v.  East  St.  Louis,  81. 
Carroll,  Farmers'  L.  &  T.  Co.  v., 

9,14. 
Carroll  Co.  v.  Smith,  190. 
Carter  v.  Howe  Mach.  Co.,  163. 
Carter  v.  Peck,  129. 
Carter.  Pontiac  v.,  203. 
Carter,  Wrigiit  v.,  8. 
Carthage,  Cullen  v.,  170. 
Case  V.  Kelly,  81,  85. 
Casey  v.  Galli,  112. 
Cashnian  v.  Brownlee,  146. 
Cass  V.  Manchester,  etc,  Co.,  53. 
Cass  Co.  V.  Johnson,  227. 
Catherman,  Hilbish  v.,  181. 
Caudy  v.  Knitting  Co.,  162. 
Cauldvvell,  Alexander  v.,  154, 194. 
Cavanagh  v.  Boston,  183,  212. 
Cecil,  Lamb  v.,  91. 
Cedar  County,  Withelm  v.,  194. 
Cemetery    Association    v.    New 

Haven,  188. 
Central  Association.  Alabama  Ins. 

Co.  v.,.70,  96. 
Central  Bank    v.  Empire    Stone 

Co.,  9. 
Central  Bank,  Merchants'  Bank 

v.,  77. 
Central  Gold  Min.  Co.  v.  Piatt, 

83. 
Central  Ry.  Co.  v.  Coggin,  146. 
Central  Ry.  Co.  v.  Collins,  9. 
Central  Ry.  Co.  v.  Georgia,  141, 

143,  144,  148. 
Central  Ry.  Co.,  Low  v.,  9. 
Central  Ry.  Co.,  Morris  Canal  Co. 

v.,  8. 
Central  Ry.  Co.  v.  Penn.  R.  Co., 

121. 
Central  Ry.  Co.  v.  Smith,  163. 
Central  Ry.  Co.,  Stockton  v.,  137. 
Central  Trans.  Co.  v.  Pullman  Co., 

9,  10,  12,  37,  52,  53,  54,  55,  68, 

69,  70,  72,  74,  78,  137,  138. 
Centralia,  Bishop  v.,  200. 
Centralia  v.  Krouse,  206. 
Chadsey,  Alvey  v.,  159. 
Chaffee  v.  Granger,  188. 
Chaffee  v.  Rutland  R.  Co.,  124. 
Chaffee  Co.  v.  Potter,  53. 
Chamberlin  v.  Evansville,  176. 


Chamberlin   v.    Huguenot    Mfg. 

Co..  51,  168. 
Chambers  v.  Baptist  Society,  94. 
Chambers  v.  Falkner,  9,  53,  71, 99, 
Chambers  v.  Manchester,  etc.  R. 

Co.,  70,  134. 
Chambers  v.  Satterlee,  203. 
Chambers  v.  St.  Louis,  81. 
Champaign  v.  Mclnnes,  205. 
Cham  plain  Ry.  Co.  v.  Valentine, 

81. 
Chandler  v.  Bay  St.  Louis,  230. 
Chapin  v.  Greenlees,  120. 
Chapin  v.  Vermont,  etc.  R.  Co., 

135. 
Chapman  v.  Colby,  85. 
Chapman  v.  Douglas  Co.,  74,  233. 
Chapman,  Walker  v.,  69. 
Charles  River  Bridge  Co.  v.  Bridge 

Co..  8.  9,  28. 
Charleston,  Backman  v.,  194. 
Charleston,  Branch  v.,  148. 
Charleston,  Butler  v.,  201. 
Charleston,  Feldman  v.,  181. 
Charleston,  Johnston  v.,  206. 
Charlotte,  Hill  v.,  202. 
Charlotte,  Wilson  v.,  177. 
Charlton  v.  New  Castle  Ry.  Co., 

143. 
Charter  Oak  Ins.  Co.,  ^tna  Bank 

v.,  9. 
Chase,  Harvey  v.,  100. 
Cheeney  v.  Brookfield,  190. 
Chemical  Bank  v.  Kohner,  161. 
Chesapeake  &  Del.  Ry.,  Perrine 

v.,  8,  12,  28,  81. 
Chesire,  Smith  v.,  230. 
Chesire  Glass  Co.,  Dorley  v.,  51, 

168. 
Chester,  Bakersfield,  etc.  Ass'n  v., 

51, 168. 
Chetlain  v.  Insurance  Co.,  120. 
Chewacla    Lime  Works  v.  Dis- 

mukes,  70. 
Cheyenne,  Union  Pac.  Co.  v.,  177. 
Chicago  V.  Cameron,  53. 
Chicago,  Clayburg  v.,  220. 
Chicago  v.  Cleveland,  126. 
Chicago  V.  Fowler,  204 
Chicago,  Fuller  v.,  196. 
Chicago,  Garrison  v.,  196. 
Chicago,  Kinzie  v.,  47. 
Chicago  v.  Laflin,  213. 


XXVI 


TABLE    OF   CASES    CITED. 


References  are  to  sections. 


Chicago,  Mahev  v.,  94,  191, 
Chicago  V.  McGiven,  :.'05. 
Cliicago  V.  McGraw,  222. 
Chicago  V.  Robbins,  206,  220. 
Chicago,  Schnell  v.,  192. 
Chicago  V.  Stearns,  206. 
Cliicago  V.  Trotter,  176. 
Chicago.   Transportation  Co.    v., 

81,  208. 
Chicago,  Tugman  v.,  176. 
Chicago,  Wlieeler  v.,  191. 
Chicago,  etc.  Coal  Co.  v.  Hall,  146. 
Chicago,  etc.  R.  Co.  v.  Briggs,  8. 
Chicago,  etc.  R.  Co.,  Bryan  v.,  163. 
Chicago,  etc.  R.  Co.,  Chicago  Co. 

v..  145. 
Chicago,  etc.  R.  Co.,  Craker  v., 

16;J. 
Chicago,  etc.  R.  Co.,  Ellerman  v., 

247. 
Chicago,   etc.   R.  Co.,  Hodgman 

v.,  235. 
Chicago,  etc.  R.  Co.  v.  Howard, 

96.  136. 
Chicago,    etc.    R.     Co.    v.    Lake 

Shore,  etc.  R.  Co.,  143. 
Chicago,  etc.  R.  Co.  v.  Marseilles, 

120. 
Chicago,  etc.  R.  Co.  v.  Moffitt,  144, 

146. 
Chicago,  etc.  R.  Co..  Peck  v.,  145. 
Chicago,   etc.   R.   Co.  v.   People, 

129. 
Chicago,  etc.  R.  Co.  v.  St.  Anne, 

240. 
Chicago,  etc.  R.  Co.  v.  Union  Pac. 

R.  Co.,  19,  71. 
Chicago,    etc.    R.    Co.,   Wiggins 

Ferry  Co.,  129. 
Chicago  Gas  Trust  Co.,  People  v., 

121.  122,  137,  148. 
Chichester,  etc.  R,  Co,,  Taylor  v., 

52,  55,  56,  70. 
Child  V.  Boston,  208. 
Childs  V.  Smith,  3. 
Chillicothe.  Bank  v.,  96. 
Chin  Yan,  Ex  parte,  176. 
China,  Estes  v.,  213. 
Chorn,  Haddeu  v.,  94. 
Chouteau  v.  Allen,  105,  194. 
Christian  Union  v.  Yount,  166. 
Christian  University  v.  Jordon, 

78. 


Christopher  v.  Christopher.  189. 
Christy,  Bell's  Gap  Ry.  Co.  v.,  79. 
Chubb  V.  Upton,  100,  112. 
Church  V,  City,  172, 
Church,  Donnelly  v„  100. 
Church  V.  Sterling,  77.  128. 
Churchill,  Frankfort  Co.  v.,  79, 
Cincinnati.  Walker  v.,  170. 
Cincinnati.  Wheeler  v.,  170,  219. 
Cincinnati  Co,  v.  Rosenthal,  71, 
Citizens'  Bank  v,  Wiegand,  159. 
Citizens'  Building  Ass'n  v.  Coriell, 

156,  158, 
Citizens'  Gas  Co.  v.  Ehvood,  216. 
Citizens',  etc.  R.  Co.,  State  Board 

v.,  9. 
Citizens'  Savings  Ass'n  v.  Topeka, 

181. 
Citizens'  Water  Co.  v.  Hydraulic 

Co.,  216, 
Citizens'  Water  Co.,  Sherwood  v., 

218, 
City,  Anderson  v.,  175. 
City,  Church  v.,  172. 
City,  Commissioners  v.,  209. 
City  of  Aurora  v.  West,  237, 
City  of  Eufaula  v.  McNab,  224. 
City  of  Flora  v.  Nancy,  205. 
City  of  Kahoka,  Hill  v.,  233. 
City  of  Kansas,  Arn  v,,  211. 
City  of  Kansas,  Barr  v,,  201. 
City  of  Louisville  v.  Bank,  215. 
City  of  Madison  v.  Baker,  211. 
Citv  of  Nevada,  Norton  v.,  233. 
City  of  New  York,  Bradv  v,.  189, 
City  of  Ohio  v.  New  York,  etc.  R. 

'Co.,  124, 
City  of  Paterson.  State  v„  235, 
City  of  Raleigh,  Tucker  v..  96. 
City  of  Toledo  v.  Cone,  169, 170. 
City  of  Topeka  v.  Huntoon,  177. 
City  Bank  v.  Bateman,  77, 
City  Bank.  Perkins  v.,  161, 
City  Council,  Davis  v„  202. 
City  Council  v.  Plank  Road  Co., 

9.70. 
City  Council,  Stockton,  etc,  R,  Co. 

v..  181, 
City  Council,  Winter  v..  239, 
City  Gas  Co.,  Norwich  Gas  Co,  v., 

216.  218, 
City  Railroad,  Brooklvn  v.,  215. 
Claffin  V,  South,  etc,  R.  Co.,  132. 


TABLE    OF    CASES    CITED. 


XXVI 1 


References  are  to  sections. 


Claflin  V.  Hopkinton.  175. 
Clapp  V.  Peterson,  120. 
Claiborne  County  v.  Brooks,  223, 

237. 
Clarendon,  Lewis  v.,  237. 
Clarendon  Township,  Young  v., 

223,  230,  237. 
Clark  V.  Bever,  115. 
Clark  V.  Bradsall,  173. 
Clark,  Calloway  M.  Co.  v.,  81. 
Clark  V.  Davenport,  170. 
Clark  V.  Des  Moines,  230. 
Clark  V.  Edgar,  158. 
Clark  V.  Farmers'  Mfg.  Co.,  100. 
Clark  V.  Farrington,  14. 
Clark  V.  Hancock,  223. 
Clark,  Harvester  Co.  v.,  168. 
Clark  V.  Iowa  Citv,  135. 
Clark  V.  Lyons  Co..  194. 
Clark  V.  Omaha  R.  Co.,  137. 
Clark  V.  School  District,  100. 
Clark,  State  v.,  171,  176,  181. 
Clark,  Stoutmore  v.,  101,  168. 
Clark  V.  Sutton,  203. 
Clark  V.  Titcomb,  83,  96. 
Clarkin,  Natoma,  etc.  Co.  v..  81. 
Clarksburg.  Richards  v..  170. 
Clarkson.  Bergen  v.,  173.  174. 
Clarksville.  Cause  v.,  230. 
Clason  V.  Milwaukee,  176. 
Clay  V.  County,  237. 
Clay  V.  Grand  Rapids,  207. 
Claybui-g  v.  Chicago,  220. 
Clayers,  Vermont  Ry.  Co.  v.,  3. 
Clearwater  v.  Meredith,  144,  147, 

148. 
Cleary,  Marquette  v.,  202. 
Cleburne,  Coler  v.,  226. 
Cleneay,  Junction  R.  Co.  v.,  135. 
Cleveland,  Chicago  v.,  126. 
Cleveland.  Rhodes  v.,  211. 
Cleveland  v.  St.  Paul,  206. 
Cleveland,  State  v.,  172. 
Cleveland,   Western    College   v., 

220. 
Cleveland,  Williams  College  v., 

220. 
Cleveland,  etc.  R.  Co.  v.  Clossex-, 

IHl. 
Cleveland,  etc.  R.  Co.,  Conn.  L. 

Ins.  Co.  v.,  135. 
Cleveland,  etc.  R.  Co.,  Mut.  Ins. 

Co.  v.,  100. 


Cleveland,  etc.  R.  Co.  v.  Prewitt, 

146. 
Cleveland,  etc.  R.  Co.  v.  Robbins, 

126. 
Cleveland,  etc.  R.  Co.,  Zabriskie 

v.,  9,  53,  76,  135. 
Clinch  V.  Financial  Corp.,  142. 
Clinton,  Donelson  v.,  206. 
Clinton  v.  Phillips,  176. 
Clinton,  Ross  v.,  211. 
Clinton  Water  Works,  Davis  v., 

219. 
Close  V.  Glenwood  Cemetery,  168. 
Closser,  Cleveland,  etc.  R.  Co.  v., 

131. 
Coal  Float  v.  Jeffersonville,  176. 
Coal  Valley  Co.,  Peoria,  etc.  R. 

Co.  v.,  9. 
Coates  V.  Canaan,  200. 
Coates  V.  Don  n  ell,  91. 
Coates,  Gaines  v.,  216. 
Cobourg,  etc.  Ry.  Co.,  Coyley  v., 

146. 
Cobshire,  Aurora  v.,  200. 
Cochran,  Kennedy  v.,  69. 
Coe,  Pen  nock  v.,  8. 
Coggeshill  V.  Pelton,  95. 
Coggin  V.  Central  R.  Co.,  146. 
Cohen  v.  Wilkinson,  53. 
Cohoes.  Bvrnes  v.,  209,  241. 
Coit  V.  N.'Car.  Gold  Co.,  108,  115. 
Coke  Co.,  State  v.,  199. 
Colby,  Bank  v.,  144. 
Colby,  Chapman  v.,  85. 
Cole,  First  Parish  v.,  92. 
Cole,  Inhabitants,  etc.  v.,  81. 
Cole  V.  La  Grange.  181,  225. 
Coles  V.  Bank  of  England,  124. 
Coleman  v.  Columbia  Oil  Co.,  120. 
Coler  V.  Cleburne,  226. 
College,  State  v.,  83. 
Collerne   v.   London   Bldg.  Soc, 

120. 
Collier,  Ruggles  v.,  9. 
Collins,  Central  Ry.  Co.  v.,  9. 
Collins  V.  Hatch.  212. 
Colman  v.  Eastern  Counties  Ry. 

Co.,  9,  39,  136. 
Coloma  V.  Eavis,  227.  228. 
Colorado  Spring.s,  Cornell  v.,  81. 
Colter  V.  Doty,  15. 
Columbia,  Black  v.,  219. 
Columbia  Co.,  Flint  v.,  87. 


XXVIU 


TABLE    OF    CASES   CITED. 


References  are  to  sections. 


Columbia  Oil  Co.,  Coleman  v.,  120. 
Columbus,  etc.  R.  Co.,  McAuley 

v.,  143. 
Columbus,  etc.  R.  Co.  v.  Powell, 

146. 
Colvin,  Sheridan  v.,  177. 
Combination  Trust  Co.  v.  Wild, 

105. 
Commanche  Co.  v.  Lewis,  228. 
Commercial  Bank,  Franklin  Bank 

v.,  121. 
Commercial  Bank  v.  Tola,  181, 225. 

237. 
Commercial  Bank.  Lathrop  v.,  81. 
Commercial    Bank    v.    Newport 

Mfg.  Co..  96,  100. 
Commercial  Hotel,  Richwold  v., 

83,  91. 
Commissioners,  Atchison,  etc.  R. 

Co.  v.,  146. 
Comiuissioners  v.  Bolles,  238. 
Commissioners  v.  City,  209. 
Commissioners,  Comm.  v.,  179. 
Commissioners  v.  Cox,  190. 
Commissioners  v.  Gas  Co.,  176, 212. 
Commissioners  v.  Goodrich,  212. 
Commissioners,  Haag  v.,  222. 
Commissioners,  Hadley  v.,  3,  12. 
Commissioners,  Inhabitants  v..  86. 
Commissioners  v.  January,  238. 
Commissioners,  Louisville  v.,  185. 
Commissioners,  Memphis   R.  Co. 

v..  141. 
Commissioners,  Moran  v.,  193. 
Commissioners,  Munn  v.,  96,  100. 
Commissioners,  People  v.,  189. 
Commissioners,  Pother  v.,  228. 
Commissioners  v.  Railway  Co.,  96. 
Commissioners,  Reynolds  v.,  83. 
Commissioners,  State  v.,  148,  173, 

185. 
Commissioners  v.  Tliayer,  227. 
Commissioners  v.  Worcester,  312. 
Commonwealth,  Bank  of  Penn- 
sylvania v.,  8,  12. 
Commonwealtli   v.    Conimissiou- 

ers,  179. 
Commonwealth,  Erie  Ry.  Co.  v., 

8.  10,  12. 
Commonwealth  v.  Franklin  Canal 

Co.,  12. 
Commonwealth,  Kepner  v.,  171. 
Commonwealth  v.  Markham,  182. 


Commonwealth  v.  Pittsburg,  100. 
Commonwealth  v.  Smith,  83,  133, 

134,  137. 
Commonwealth,  Society,  etc.  v.,. 3, 
Commonwealili  v.  Steffee,  176. 
Commonwealth,  Williamsport  v., 

188. 
Commonwealth  v.  Worcester,  176. 
Compagnie  Francaise  v.  Western 

Union  Co.,  121. 
Conant  v.  Canal  Co.,  77. 
Concord,  Hubbard  v.,  205. 
Concord,  Hutchison  v.,  204. 
Concord  v.  Robinson,  223, 228, 330, 

237. 
Concord,  etc.  R.  Co.,  Manchester, 

etc.  R.  Co.  v.,  130. 
Concord,  etc.  R.  Co.,  Pearson  v., 

122 
ConeT  Hartford.  207. 
Cone,  Toledo  v.,  169,  170,  220. 
Conery   v.  New   Orleans  Water 

Works,  177. 
Congregational  Church  v.  Trust- 
ees, 94. 
Congress,  etc.  Co.,  Knowlton  v., 

109.  119. 
Conn,  Flash  v.,  106. 
Connecticut,  etc.  Ins.  Co.  v.  Cleve- 
land, etc.  R.  Co.,  100,  135. 
Connecticut  Sav.  Bank  v.  Fiske, 

96. 
Conservators,  etc.  v.  Ash,  3. 
Converse,  Green  Co.  v.,  144. 
Converse  v.  Norwich  Trans.  Co.,  53. 
Convbeai'e,  New  Brunswick  Ry. 

v.,  162. 
Cook  V.  Milwaukee,  205,  220. 
Cook  V.  Tullis,  77. 
Cook  Co.  V.  Hough.  81. 
Coombs,  Ft.  Wayne  v.,  207,  209, 

211. 
Coon,  People  v.,  195. 
Cooper  V.  Atlanta,  222. 
Cooper  V.  Corbin,  131. 
Cooper  V.  Curtis,  161. 
Goose,  Sawyer  v.,  220. 
Copley  v.  Grover  &  B.  Co.,  162. 
Corbin,  Cooper  v.,  131. 
Corgill  V.  Bower,  158. 
Cork,  etc.  R.  Co.,  In  re,  96. 
Corieli,  Building  Association  v., 

156,  158. 


TABLE    OF   CASES    CITED. 


XXIX 


References  are  to  sections. 


Corn  Exchange  Bank  v.  Coal  Co., 

77. 
Cornell  v.  Colorado  Springs,  81. 
Cornell  v.  Guilford,  175. 
Cornes,  Gordon  v.,  225. 
Corporation  of  Ireland,  Guiness 

v.,  118. 
Corporation  of  Ireland,  Knight 

v.,  168. 
Corrigan  v.  Gage,  176. 
Corserv.  Paul,  161. 
Corwith,  Galena  v.,  50. 
Cory  V.  County  of  Somerset,  189. 
Coughlin  V.  Gleason,  189. 
Coulson  V'.  Portland,  231. 
Coulter,  St.  Paul  v.,  171,  212. 
Council  Bluffs,  Dodge  v.,  166. 
Council  Bluffs,  Everett  v.,  212. 
Council  Bluffs,  Powers  v.,  220. 
Council  Bluffs  v.  Stewart,  196. 
Countv,  Clav  v.,  237. 
County,  People  v.,  230. 
County  Commissioners,  Bentley 

v.,  170. 
Countv  Commissioners  V.  Ducket, 

220. 
County  of  Daviess  v.  Huidekoper, 

227. 
County  of  Douglas,  Chapman  v., 

233. 
County   of   Jasper,  Anthony  v., 

226. 
County  of  Moultrie  v.  Bank,  197. 
County  of  Randolph  v.  Post,  227. 
County  of  Somerset,  Cary  v.,  189. 
Cousley,  Screw  Co.  v.,  79. 
Coventry,  Evans  v.,  120. 
Covert  v.  Rogers,  91. 
Covington,  Bateman  v.,  215. 
Covington,  Harper  v.  224, 
Covington,  Haynes  v.,  201. 
Covington,  Henderson  v.,  170, 175. 
Cowan  V.  Milburne,  69. 
Cowan  v.  West  Troy,  189,  194. 
Cowdrey,  Galveston  v.,  141. 
Cowell  V.  Springs  Co.,  166. 
Cowgill  V.  Long,  238. 
Cox,  Lafayette  v.,  9. 
Coyley  v.  Cobourg,  etc.   R.  Co., 

146. 
Cozart  v.  Georgia,  etc.  R.  Co.,  52, 

136,  137. 
Craig  v.  Andreas,  69. 


Craig  V.  Virksburg,  135. 

Craigie  v.  Hadley,  162. 

Craker  v.  Chicago,  etc.  R.  Co.,  163. 

Crane,  Unity  Ins.  Co.  v.,  3. 

Crawford  v.  I^ongstreet,  81. 

Crawfordsville  v.  Bond,  209. 

Creal  v.  Keokuk,  201. 

Crescent  City  G.  L.  Co.  v.  New 
Orleans  G.  L.  Co.,  216. 

Crescent  City  Ins.  Co.,  New  Or- 
leans v..  219. 

Creswell,  Williams  v.,  166. 

Crocker,  Shaw  v.,  203. 

Crompton,  Pierce  v.,  167. 

Crompton  v.  Zabriskie,  198. 

Cropper,  Birch  v.,  117. 

Cross,  Lumsden  v.,  225. 

Crossett  v.  Janesville,  203. 

Crowther,  Boulton  v.,  203. 

Crum's  Appeal,  76. 

Culbertson.  Butts  v.,  100. 

Culbertson  v.  Fulton,  197,  231. 

CuUen  V.  Carthage,  170. 

Cumberland,  etc.  Co.,  Exchange 
Bank  v.,  77. 

Cumberland,  etc.  Co.,  Hoffman, 
etc.  Co.  v.,  153. 

Cumberland,  etc.  Co.  v.  Parish, 
153. 

Cunlift'e  v.  Manchester,  etc.  R. 
Co.,  53. 

Cunliffe,  B.  &  Co.,  Building  So- 
ciety v.,  96,  97. 

Cunliffe,  Mayor,  etc.  v.,  190,  222. 

Curran  v.  Arkansas,  107. 

Currier  v.  Lebanon  Co.,  120. 

Curry  v.  Mt.  Sterling,  86. 

Curtis,  Cooper  v.,  161. 

Curtis,  Farmers'  L.  &  T.  Co.  v., 
81. 

Curtis  V.  Leavitt,  13,  74,  96,  98, 
100. 

Curtis.  Medomak  Bank  v.,  77. 

Curtis  V.  Piedmont  Co.,  74, 

Curtis  V.  Whipple,  224. 

Curzon,  Droitwich,  etc.  Co.  v., 
109,  113. 

D. 

Dabney  v.  Bank,  91. 
Dalley,  Wakeman  v.,  158. 


XXX 


TABLE  OF  CASES  CITED. 


References  are  to  sections. 


Dana  v.  Bank,  14,  87. 

Danbury,  etc.  R.  Co.  v.  Wilson,  9. 

Dandridffe,  Bank  of  U.  S.  v.,  13. 

24,  28,   50,   76,  151,   154,   157, 

160. 
Dandridge.   Steam  Nav.   Co.    v., 

201. 
Danielly  v.  Cabanniss,  177,  225. 
Danville,  Small  v..  213. 
Danville  Seminary,  Nutt  v.,  7. 
Darling  v.  Bangor,  202. 
Darling  v.  Railroad  Co.,  129. 
Darling  v.  St.  Paul.  173. 
Darnell,  Coates  v.,  91. 
Darst  V.  Gale,  58. 
Darst  V.  People,  212. 
Dartmouth  College  v.  Woodward, 

9,  21,  28,  50. 
Dater  v.  Bank,  83. 
Davenport,  Clark  v.,  170. 
Davenport,   Davenport,   etc.    Co. 

v.,  197. 
Davenport,  East  Lincoln  v.,  238. 
Davenport,  Grant  v.,  198,  217. 
Davenport,  King  v.,  212. 
Davenport  v.  Mayor,  204. 
Davenport  v.  Ruckman,  220. 
Davenport,  Van   Pelt  v..  209,  211. 
Davidson  v.  Bridgeport,  77. 
Davidson,  Hayward  v.,  81. 
Davidson,  Milne  v.,  172. 
Davidson  v.  AVard,  158. 
Davidson,  Williams  v.,  170, 172. 
Davidson  v.  Young,  192. 
Daviess  Co.  v.  Dickinson,  190, 224, 

231. 
Daviess  Co.  v.  Huidekoper,  227. 
Daviess  Co.,  Ogden  v.,  229. 
Davis  V.  Anita.  176. 
Davis  V.  City  Council,  202. 
Davis  V.  Clinton    Water  Works, 

219. 
Davis  V.  Des  Moines,  197. 
Davis,  De  Russey  v.,  170. 
Davis,  Home  Ins.  Co.  v.,  166. 
Davis.  Littlewort  v.,  70. 
Davis  V.  Mayor,  199. 
Davis  V.  Montgomery,  213,  219. 
Davis  V.  Old  Colony  R  Co.,  36, 47, 

53,  136,  137. 
Davis  V.  Ren.  &  Sar,  Ry.  Co.,  8. 
Davis'  Case,  96. 
Dawson,  Iron  Co.  v.,  166. 


Dawson,  Revanna  Nav.  Co.  v.,  81» 

95. 
Day  V.  Mitford,  204. 
Day  V.  Spiral  Spring  Co.,  74. 
Dayton  v.  Quigley,  176. 
Dearborn,  England  v.,  96. 
Dean  v.  Todd,  177. 
De  Camp  v.  Atwood,  91. 
De  Camp  v.  Dobbins,  81. 
Decatur,  Hill  v.,  171. 
Decker,  Evansville  v.,  209. 
Deering,  Seele  v.,  213. 
De  Grand,  Russell  v.,  71. 
De  Kay,  Hackensack  Water  Co. 

v.,  134.  135,  168. 
Delauion,  New  Orleans,  etc.  Co. 

v.,  141. 
Delaware,  etc.  Co.,  Black  v.,  53, 

70,  72,  137. 
Delaware,  etc.   Co.,  Brisham  v., 

126. 
Delaware,  etc.  Co.  v.  East  Orange, 

176. 
Delaware,  etc.  Co.  v.  Penn.  Coal 

Co.,  77. 
Delaware,   etc.   Co.,  Wasmer  v., 

137. 
Delaware  Bay,  etc.  R.  Co.,  Joint 

Co.  v.,  8. 
Delaware  Tax  Cases,  8, 145, 148. 
Deming  Co.,  Roberts  v.,  74. 
Demon,  Bank  of  Lj'ons  v.,  77. 
Denike  v.  Lime  Co.,  143. 
Denison,  Burnett  v.,  229. 
Denison.  Simpson  v.,  130. 
Denton  v.  Jackson,  3. 
Denver,  etc.  R.  Co.  v.  Atchison, 

etc.  Co.,  131. 
Denver,  etc.  R.  Co.  v.  Harris,  162. 
Depere  v.  Bellevue,  186. 
Deposit  Association,    Lamm   v., 

194. 
Derby   Fishing  Co.,  Witte  v.,  15. 
Derinzy  v.  Ottawa,  203. 
De  Russey  v.  Davis,  170. 
De  Ruyter  v.  St.  Peter's  Church, 

83. 
Des  Moines,  Broburg  v.,  205. 
Des  Moines,  Clark  v.,  230. 
Des  Moines,  Davis  v.,  197. 
Des  Moines,  Des  Moines  Gas  Co. 

v.,  172,  177.  216. 
Des  Moines,  Hauger  v.,  170. 


TABLE   OF   CASES    CITED. 


XXXI 


References  are  to  sections. 


Des  Moines,  Van  Horn  v.,  219. 
Des  Moines,  etc.  R.  Co.,  Teacliout 

v.,  53. 
De  Sota,  Land  v.,  233. 
Des  Plaines.  Poyei'  v.,  178. 
Detroit.  Dewey  v.,  203. 
Detroit,  Goodrich  v..  50,  188. 
Detroit  v.  Hosnier,  189. 
Detroit,  Mekellar  v.,  205. 
Detroit,  Wilkins  v.,  189. 
Devian.  Guentlier  v.,  69. 
Dewey  v.  Detroit,  202. 
Dewitt  V.  San  Francisco,  185. 
Deyo  V.  Otoe  Co.,  237. 
Dhlin,  Insurance  Co.  v.,  77. 
Dickerman,  Somerville  v.,  170, 195. 
Dickinson,  Daviess  Co.  v.,  190, 224, 

281. 
Dickinson  v.   Poughkeepsie,  191. 
Dickson  v.  United  States,  82. 
Dill  V.  Inhabitants,  etc.,  201. 
Dill  V.  Wareham,  119. 
Dingley  v.  Boston,  213. 
Dingman  v.  People,  215. 
Dinsmore  v.  Atlantic,  etc.  R.  Co., 

187. 
Dimpfell  v.  Ohio  R.  Co.,  78. 
Di^mukes,  Chewacla  Lime  Works 

v.,  70. 
Dispatch   Line  v.  Bellamy  Mfg. 

Co.,  77. 
District  of  Columbia,  Barnes  v., 

2J0. 
District  of  Columbia,  Johnson  v., 

208. 
Dix  V.  Dummerston,  195. 
Dix,  West  River,  etc.  Co.  v.,  183. 
Dixon  V.  Baker,  211. 
Dixon  Co.  V.  Field,  53,  190,  238, 

232. 
Dixon  Co..  Hedges  v.,  73,  231. 
Dobbins.  De  Camp  v.,  81. 
Dodge,  Council  Bluffs  v.,  166. 
Dodge,  Houghton  v.,  77. 
Dodge  V.  VVoolsey.  58. 
Donnally,  Parker  v.,  159. 
Donnell  v.  Lewis  Co.  Bank,  96. 
Donnelly  v.  Church.  100. 
Donohue,  French  v..  168. 
Donovan  v.  Green,  237. 
Dooley  v.  Chesire  Glass  Co.,  51, 

168. 
Dore  v.  Milwaukee,  203. 


Dorman  v.  Jacksonville,  203. 
Doty,  Cotter  v..  15. 
Dougherty  v,  Hunter,  159. 
Douglas,  Auburn  Plank  Road  Co. 

v.,  8. 
Douglas,  Niantic   Sav.  Bank  v.,^ 

146. 
Douglas  V.  Placerville,  198. 
Douglas  V.  Virginia  City,  50,  188. 
Douglas,  Weismer  v.,  181,  237. 
Douglas  Co.,  Chapman  v.,  74,  233. 
Doulson  V.  Clinton,  206. 
Dover  &  D.  Ry.  Co.,  McGregor  v.,. 

9,  55,  56.  70. 
Dow,  Memphis,  etc.  R.  Co.  v.,  96. 
Downey,  111.  Cent.  R.  Co.  v.,  164. 
Downing  v.  Marshall,  82. 
Downing  v.  Mt.  Washington,  etc. 

Co.,  9.  47. 
Doyle  V.  Austin,  181. 
Doyle  V.  Migner,  8. 
Drainage  Commissioners,  Elmore 

v.,  221. 
Drake  v.  Lowell,  204. 
Drake  v.  Phillips,  198. 
Dranesburg  v.  Jenkins,  237. 
Drew,  National  Ex.  Co.  v.,  163. 
Drew,  Northern  Cent.  Co.  v.,  146. 
Drexel  v.  Town  of  Lake,  207. 
Droitwich,  etc.  Co.  v.  Curzon,  109, 

113. 
Drurv  v.  Inhabitants,  94. 
Dry  bocks  Co.  v.  Hicks,  81. 
Dubuque,    Gelpcke  v.,   135,   227, 

288. 
Dubuque  v.  Maloney,  212. 
Dubuque,  Manderchid  v.,  203. 
Dubuque,   etc.    R.   Co.  v.    Litch- 
field, 9. 
Duckett,  County  Commissioners 

v.,  220. 
Duckwall  v.  New  Albany,  175. 
Duke  V.  Brown,  229. 
Duramer,  Wood  v.,  107. 
Dummerston,  Dix  v.,  195. 
Duncomb  v.  N.  Y.  etc.  R.  Co.,  105. 
Dunlap,  Rabe  v.,  137. 
Dunlap,  Rj^an  v.,  161. 
Dunn,  New  Orleans,  etc.  v.,  177. 
Dupee  V.  Water  Power  Co..  83, 120. 
Durango  v.  Pendleton,  201. 
Durant  v.  Palmer,  208. 
Durer  v.  Hudson  Co.  Ins.  Co.,  77. 


xxxu 


TABLE    OF   CASES    CITED. 


References  are  to  sections. 


Dutch  Church  v.  Brando w,  95. 
Dutch  Church,  Van  Houton  v., 

94. 
Dyersburg,  Norton  v.,  223,  230. 


E. 


Ealdn  v.  St.  Louis  R.  Co.,  137. 

Eagle  Banlc.  Hooker  v.,  77. 

Eagle  Ins.  Co.,  Strauss  v.,  9, 47,  50. 

Earl  of  Shrewsbury  v.  North  Staf- 
ford Rv.  Co.,  70,  79. 

Earle,  Bank  of  Augusta  v.,  8, 9, 26, 
28,  47,  53, 103, 156, 157, 165, 167. 

Earle,  Taylor  v.,  122. 

Early's  Appeal,  120, 

East  Anglian  Ry.  v.  Eastern  Coun- 
ties Ry.,  9,  40,  53,  70,  72. 

East  Haddam  Bank,  Goodspeed 
v.,  162,  164 

East  Hartford,  Bridge  Co.  v.,  187, 
199. 

East  Lincoln  v.  Davenport,  238. 

East  Montpelier,  Montpelier  v.,  92. 

East  Oakland  v.  Skinner,  190, 224, 
238. 

East  Orange,  Delaware,  etc.  R. 
Co.  v.,  176. 

East  Portland,  Baltimore  v.,  201, 
222. 

East  River  Bank  v.  Hoyt,  154. 

East  Saginaw,  Carey  v.,  74. 

East  Saginaw,  Stecket  v.,  201. 

East  St.  Louis,  Carroll  v.,  81. 

East  St.  Louis,  Gartside  v.,  178. 

East  St.  IjQuis  V.  Gas  Light  Co., 
188,  216. 

East  St.  Louis  v.  St.  John,  86. 

East  St.  Louis  v.  Wehrung,  173. 

East  Tenn.  etc.  R.  Co.  v.  Nelson, 
129. 

East  Tenn.  etc.  R.  Co.  v.  Rogers, 
129. 

East  Warren,  etc.  L.  Co.,  Senney 
v.,  87. 

Eastern,  etc.  R.  Co.,  Bagshaw  v., 
9,  53,  70. 

Eastern,  etc.  R.  Co.  v.  Brown,  162. 

Eastern,  etc.  R.  Co.,  Coleman  v., 
9,39. 

Eastern,  etc.  R  Co.  v.  East  An- 
glian, etc.  Co.,  9,  40,  53,  70, 72. 


Eastern,  etc.  R  Co.  v.  Hawkes,  9, 

52   137 
Eastern,  etc.  R  Co.,  Lynch  v.,  235. 
Eastern,  etc.  R.  Co.,  March  v.,  124. 
Eastern,  etc.  R  Co.,  Sturges  v., 

118. 
Eastern     Plank     Road     Co.    v. 

Vaughan,  3. 
Eastman  v.  Meredith,  219. 
Easum  v.  Buckeye  Brew.  Co.,  122. 
Eaton  V.  Aspinwall,  106. 
Eaton,  Nelson  v.,  96. 
Eaton  V.  Pacific  Nat.  Bank,  127. 
Eaton,  etc.  R.  Co.  v.  Hunt,  145. 
Eau  Claire,  Smith  v.,  203. 
Eavis,  Coloma  v.,  227,  228. 
Ebbw.  Vale,  etc.  Co.,  In  re,  109, 

113. 
Eby  V.  Guest,  120. 
Eddy,  Jeverin  v.,  206. 
Edgar,  Clark  v.,  158. 
Edison  E.  L.  Co.  v.  New  Haven, 

etc.  Co.,  144. 
Edwards  v.  Grand  Junction  R 

Co.,  77. 
Edwards  v.  Midland  Ry.,  162. 
Edwards,  Springfield  v.,  196,  235. 
Egmann  v.  Blanke,  120. 
Eickemeyer,  Sheldon  Hat  Co.  v., 

83, 106. 
Eidman  v.  Bowman,  110. 
Eldridge  v.  Smith,  141. 
Elkhorn  Bank,  Rockwell  v.,  96, 

100,  134. 
Elkins  V.  Camden,  etc.  R.  Co.,  131, 

155. 
Ellerman  v.  Chicago,  etc.  R.  Co., 

47. 
Elliott  V.  Abbott,  160,  161. 
Elliott,  Marietta,  etc.  R  Co.  v.,  9. 
Elliott,  M^yor  v..  95. 
Elliott  V.  Philadelphia,  219. 
Elliott,  Union  Bank  v.,  91. 
Ellsworth,  Barbour  v.,  222. 
Elmore  v.  Drainage  Commission, 

221. 
Elrawood    Township    v.    March, 

238. 
Elwood,  Citizens'  Gas  Co.  v.,  216. 
Ely  V.  Grand  Rapids,  189. 
Ely,  Hooper  v.,  198. 
Ely,  N.  Y.  etc.  Ins.  Co.  v.,  13. 
Emerson  v.  Newburg,  194. 


TABLE    OF   CASES    CITED. 


XXXIU 


References  are  to  sections. 


Emery,  Harper  v„  325. 
Emery  v.  Mariaville,  230. 
Emery  v.  Ohio  Candle  Co.,  148. 
Emery,  Pierce  v..  83,  91,  100. 
Emmet  v.  Reed,  77. 
Empire  Assur.  Corp.,  In  re,  143. 
Empire  Mfg.  Co.  v.  Stewart,  167. 
Empire  Stone  Co.,  Central  Bank 

v.,  9. 
England  v.  Dearborn,  96. 
English  V.  People,  181. 
English  Joint-Stock  Co.,  Barwick 

v.,  163. 
Episcopal    Society  v.   Episcopal 

Church,  77. 
Erie,  Grant  v.,  203,  319. 
Erie,  Schwingle  v.,  331. 
Erie  City  Iron  Works  v.  Barber, 

162. 
Erie  R.  Co.,  Arnot  v.,  129. 
Erie  R.  Co.,  Belmont  v.,  53. 
Erie  R.  Co.,  Comm.  v.,  8,  10,  13. 
Erie  R.  Co.,  Heath  v.,  53. 
Erie  R.  Co.,  McGregor  v.,  145, 167. 
Erie  R.  Co.,  Pennsylvania  v.,  124. 
Erie  R.  Co.,  Vance  v.,  163, 
Erie  R.  Co.,  Woodruff  v.,  9. 
Erie  Trans.  Co.,  Stewart  v.,  9,  53, 

139,  130. 
Ernest  v.  Balfour,  148. 
Ernest  v.  Nichols,  120. 
Errol,  Rich  v.,  74,  75. 
Eschbach,  Baltimore  v.,  190,  201, 

222. 
Estelle  V.  Lake  Crystal,  205,  206. 
Estes  V.  China,  213. 
Eufaula  v.  McNab,  185,  224. 
Eureka  Basin  Co.,  In  re,  181. 
Eureka  Flour  Mills,  Smith  v.,  47, 

96, 100. 
European,  etc.  R.  Co.  v.  Poor,  158. 
Evans  v.  Coventry,  120. 
Evans,  Holdworth  v.,  70. 
Evansville,  Bishmeyer  v.,  319. 
Evansville,  Chamberlin  v.,  176. 
Evansville,  Decker  v.,  309. 
Evansville,  Evansville  R.  Co.  v., 

177. 
Evansville  R.  Co.  v.  Androscog- 
gin, etc.  Co.,  129. 
Evansville  R.  Co.,  Fisher  v.,  143. 
Evening  Journal  Association  v. 

McDermott,  162. 


Everett  v.  Council  Bluffs,  212. 
Everhardt  v.  West  Chester  Ry. 

Co.,  118. 
Ewing,  Lincoln  Sav.  Bank  v.,  92. 
Ewing  V.  Robeson,  51,  168. 
Ewing,  Shiras  v.,  218. 
Excelsior  Co.  v.  Lacey,  156. 
Exchange  Bank,  Rice  v.,  219. 
Exchange    Bank  v.  Sibley,  157, 

158. 
Exchange  Bank,  Smith  v.,  103. 
Ex  parte  Chin  Yan,  176. 
Ex  parte  Frank,  175. 
Ex  parte  Grady,  70. 
Ex  parte  Maude,  117. 
Ex  parte  Mayor,  etc.,  315. 
Ex  parte  Scholbred,  73. 
Ex  parte  Stanley,  125. 
Ex  parte  Williams,  135. 
Ex  parte  Williamson,  70,  98. 
Export  Co.,  Taylor  v.,  120. 
Eyser  v.  Weissgarber,  74,  75. 


Fairbanks,  Bank  of  Sonoma  v., 

235. 
Falkner,  Chambers  v.,  9,  53, 70, 99. 
Fanning  v.  Schammel,  288. 
Farmers',  etc.  Bank  v.  Baldwin, 

103. 
Farmers',  etc.  Bank  v.  Bank,  160. 
Farmers',  etc.  Bank,  John  v.,  101. 
Farmers',  etc.  Bank   v.  Needles, 

101. 
Farmers',   etc.  Bank,  Phelps   v., 

124. 
Farmers',   etc.   Bank,   Ridgeway 

v.,  96,  100. 
Farmers',  etc.  Bank  v.  Sherman, 

77. 
Farmers',  etc.  Bank,  Spohn  v.,  12. 
Farmers',  etc.  Bank  v.  Transpor- 
tation Co.,  129. 
Farmers'  Ins.  Co.,  Luthe  v.,  53. 
Farmers'  L.  &  T.  Co.  v.  Carroll,  9, 

14. 
Farmers'  L.  &  T.  Co.  v.  Curtis,  81. 
Farmers'  L.  &  T.   Co.,  Harmock 

v.,  131. 
Farmers'  L.  &  T.  Co.  v.  Insurance 

Co.,  92. 


XXXIV 


TABLE    OF   CASES   CITED. 


References  are  to  sections. 


Farmers'  L,  &  T.  Co.,  Racine  R.  Co. 

v.,  144,  145. 
Farmers'  L.  &  T.  Co.  v.  St.  Joseph, 

etc.  R.  Co.,  74,  131. 
Farmers'  Mfg.  Co.,  Clark  v.,  100. 
Farnsworth,  Adams  v.,  191. 
Farnum  v.  Blackstone  Canal,  96, 

145. 
Farrington,  Clark  v.,  14. 
Faulkner  v.  Aurora,  204. 
Faure  Elec.  Co.,  In  re,  154. 
Fay  V.  Noble.  96,  100. 
Fell  V.  Gas  Co.,  144. 
Feital  v.  Middlesex  R.  Co.,  129. 
Feitsam  v.  Hay,  137. 
Feldman  v.  Charleston,  181. 
Ferguson  v.  Meredith,  144. 
Ferris  v.  Ludlow,  109. 
Festial  v.  King's  College,  124. 
Field,  Dixon   County  v.,  53,  190, 

228,  232. 
Field  V.  West  Orange,  203,  211. 
Fifth    Ward    Savings    Bank    v. 

First  National  Bank,  102, 159. 
File  Works,  McLennon  v.,  136. 
Filyaw,  Bennett  v.,  129. 
Financial  Corporation,  In  re,  113. 
Financial  Corporation,  Clinch  v., 

142. 
Finnegan,  Roddy  v.,  172. 
Fireman's  Ins.  Co.,  Erode  v.,  100. 
First  Cong.  Soc.  v.  Atwater,  92. 
First  National   Bank  v.  Fricke, 

77. 
First  National  Bank  v.  Graham, 

163. 
First  National  Bank  v.  Pierson, 

103. 
First   National    Bank    v.   Salem 

Mill,  120. 
First  National  Bank  v.  Savings 

Bank,  102,  159. 
First  National  Bank,  Weckler  v., 

9,  50. 
First  Parish,  etc.  v.  Cole,  92. 
Fish  V.  Mayor,  201. 
Fisher  v.  Boston,  219. 
Fisher  v.  Evansville  R.  Co.,  143. 
Fisher  v.  Harrisburg,  176,  207. 
Fisher,  Morris  Canal  Co.  v.,  135. 
Fisher  v.  N.  Y.  etc.  R,  Co.,  146. 
Fisher.  Schockley  v.,  91. 
Fishing  Co.,  Bergen  v.,  91. 


Fishkill  Savings  Bank  v.   Bosfc- 

wick,  77. 
Fiske,  Conn.  Sav.  Bank  v.,  96. 
Fiske,  State  v.,  173. 
Fitchburg,  Weare  v.,  205. 
Fitzpatrick,  Borough,  etc.  v.,  204. 
Flack  V.  Hughes,  235. 
Flagg,  People  v..  201. 
Flagg,  Stone  v.,  3,  12. 
Flanagan.  Kansas  City  v.,  170. 
Flanders  Bros.,  Academy  of  Music 

v.,  168. 
Flash  V.  Conn,  166. 
Fleckner  v.  Bank,  21,  77,  103,  160. 
Flemming,  Louisville,  etc.  R.  Co. 

v.,  163. 
Fletcher,  Atchison,  etc.  Co.  v.,  136. 
Flint  v.  Columbia  Co.,  87. 
Fogg  V.  Blair,  115. 
Fogg  V.  Railroad  Co.,  162. 
Fond  du  Lac.  Kane  v.,  195. 
Foote,  Newport  Bridge  Co.  v.,  203. 
Foote  V.  Pike  Co.,  227. 
Forbes  v.  Marshall,  96. 
Formholz  v.  Taylor,  74,  75. 
Forsyth,  Cainden,  etc.  R.  Co.  v., 

i29. 
Fortier  v.  New  Orleans  Bank,  53; 
Fort  Scott,  United  States  v.,  196, 
Fort  Wayne  v.  Coombs,  207,  209. 

211. 
Fort  Wayne,  Grove  v.,  204. 
Fort  Wayne  Elec.  Co.,  Keokuk  v., 

137. 
Fort  Worth   City  Ry.   v.    Smith 

Bridge  Co..  9. 
Foster,  Iowa  Lumber  Co.  v.,  120-. 
Foster  v.  Lookout  Water  Co.,  219. 
Foster,  McPherson  v.,  231,  232. 
Foundry  Co.,  Stoddard  v.,  124. 
Fowler    v.   Athens    City  Water 

Works,  219. 
Fowler,  Blasdell  v.,  69. 
Fowler,  Chicago  v.,  204. 
Fowler  v.  Robinson,  107. 
Fowler  v.  Scully,  69. 
Fox  V.  New  Orleans.  190. 
Fox,  State  Bank  v.,  120. 
Francis  v.  Troy,  170. 
Frank,  Ex  parte.  176. 
Frankenberg,  Illinois  Cent.  R.  C<x 

v.,  129. 
Frankfort,  Bridge  Co.  v.,  191. 


TABLE    OF    CASES    CITED. 


XXXV 


References  are  to  sections. 


Frankfort  Co.  v.  Cliurohill,  79. 
Franklin    Bank    v.    Commercial 

Bank,  121. 
Franklin  Bank  v.  White,  69,  74, 

75,  119. 
Franklin  Bridge   Co.  v.  Wood,  3, 

12. 
Franklin  Canal  Co.,  Comm.  v.,  12. 
Franklin   Countv,  German  Sav. 

Bank  v.,  238." 
Franklin  County  v.  Lewistown 

Inst.,  9.  34,  53,  55,  70,  121. 
Franklin  County.  Maupin  v.,  190. 
Franklin  Ins.  Co.  v.  Hart,  79. 
Franklin  Wharf  Co.  v.  Portland, 

208,  213. 
Franz   v.   Building   Association, 

168. 
Fras3r  v.  Ritchie,  120. 
Frazee's  Case,  175. 
Frazier  v.  Wilcox,  83,  166. 
Freeberg,  Pitzman  v.,  237. 
Freeman,  Home  v.,  141. 
Freeman  v.  Minn.  etc.  R.  Co.,  137. 
Freeman,  State  v.,  176. 
Freher  v.  Geiseka,  74,  75. 
French  v.  Burlington,  196. 
French  v.  Donohue,  168. 
Fricke,  First  Nat.  Bank  v.,  77. 
Fricke,  Keithburg  v.,  238. 
Frost  V.  Belmont,  79. 
Frost  V.  Frostburg  Coal  Co.,  168. 
Frothingham  v.  Barney,  122. 
Frye  v.  Tucker,  128. 
Fuller  V.  Atlantic,  203. 
Fuller  V.  Chicago.  196. 
Fuller  V.  Heath,  196. 
Fulton,  Culbertson  v.,  197,  231. 
Fulton  V.  Lincoln.  170. 
Fulton  Bank,  Beach  v.,  25. 
Fulton  Bank,  Sharon    Canal  Co. 

v.,  143,  148. 
Fulton  County.  Marsh  v.,  190, 191. 

193.  194,  201,  224,  233. 
Furnell  v.  St.  Paul,  205. 
Furniss  v.  Gilchrist,  96. 

G. 

Gabel  v.  Houston,  172. 
Gage,  Corrigan  v.,  176. 
Gage  V.  Newmarket,  70. 


Gaines  v.  Coates,  216. 

Gale,  Darst  v.,  58. 

Gale  V.  Kalamazoo,  173,  215. 

Galena  v.  Cor  with,  50. 

Gallatin  Turnpike  Co.,  Hopkins 

v.,  88. 
Galli,  Casey  v.,  Il2. 
Galveston,  Allen  v.,  170. 
Galveston  v.  Cowdrey,  141, 
Galveston,  Hitchcock  v.,  62,  65, 

193,  196,  233. 
Garrison  v.  Chicago,  196. 
Gartside  v.  East  St.  Louis,  178. 
Gas  Co.,  Commissioners  v.,  176, 

212. 
Gas  Co.  V.  Des  Moines,  172. 
Gas  Co.,  East  St.  Louis  v.,  216. 
Gas  Co.,  Fee  v.,  144. 
Gas  Co.,  Grand  Rapids,  etc.  Co.  v., 

199. 
Gas  Co.,  Indianapolis  v.,  172. 
Gas  Co.  V.  Light  Co.,  199,  216. 
Gas  Co.   V.   Manufacturing  Co., 

144 
Gas  Co.  V.  Middleton,  199. 
Gas  Co.  V.  San  Francisco,  171, 191. 
Gas  Co.,  State  v.,  215,  216,  218. 
Gas  Light  Co.  v.  Gas  Co.,  199. 
Gas  Light  Co.,  East  St.  Louis  v., 

188. 
Gas  Light  Co.,  Indianapolis  v., 

217. 
Gas  Light  Co.  v.  Saginaw,  199, 

216. 
Gas  Light  Co.,  State  v.,  218. 
Gas  Light  Co.  v.  United  Gas  Co., 

74. 
Gas  Light  Co.,  Young  v.,  53. 
Gassett  v.  Andover,  191. 
Gates  V.  Hancock,  194, 
Gatling  Gun,  In  re,  114. 
Gause  v.  Clarkville,  230. 
Geiseka,  Freher  v.,  74,  75. 
Gelpcke  v.  Dubuque,  135.  227,  238. 
Georg  V.  Nevada  Central  R.  Co., 

137. 
Georgetown,  Goszler  v.,  21,  203. 
Georgetown,  Perley  v.,  222. 
Georgia,  Railroad  Co.  v.,  141, 143» 

144,  148. 
Georgia,  etc.  R.  Co.,  Cozart  v.,  52, 

136,  137. 
Georgia,  etc.  R.  Co.,  Wilkes  v.,  53. 


XXX  VI 


TABLE   OF   CASES   CITED. 


References  are  to  sections. 


German  Am.  Bank,  Brenham  v., 

224,  230. 
German  Am.   etc.   Co.,  National 

Park  Bank  v.,  136. 
German  M.  Co.,  In  re,  96. 
German  Savings  Bank  v.  Frank- 
lin Co.,  238. 
German  Savings  Bank  v.  Wulfe- 

kehlen,  120. 
Germantown  Ins.  Co.,  Dhlin  v., 

v.,  77. 
Gettys,  Kerchner  v.,  166. 
Gibboney,  Union    Township   v., 

194. 
Gibbs'  Case,  96. 
Gibbs,  Mersey  Docks  v.,  220. 
Gibbs,  Overend  &  G.  Co.  v.,  154, 

156. 
Gibson  v.  Goldthwaite,  159. 
Gilford  V.  Railroad  Co.,  198. 
Gilchrist,  Furniss  v.,  96. 
Gildersleeve.  Hinkley  v.,  9. 
Gilham  v.  Wells,  176. 
Gill,  Baltimore  v.,  196.  198. 
Gill,  Mayor,  etc.  v.,  177. 
Gillette  v.  Missouri,  etc.  R.  Co., 

164. 
Gilliam  v.  South,  etc.  R.  Co.,  163. 
Gillison  v.  Charleston,  211. 
Girard,  Vidal  v.,  92,  93,  94. 
Glasby  v.  Morris,  207. 
Glasgow  v.  Rouse,  181. 
Glass  V.  Ashbury,  170. 
Glass  Co.,  Beers  v.,  160. 
Glass  Co.,  Burr  v.,  100. 
Gleason,  Conghlin  v.,  189. 
Gleason,  Mills  v..  194. 
Glenn.  Baltimore,  etc.  R.  Co.  v., 

166. 
Glenwood  Cemetery,  Close  v.,  168. 
Glidden  v.  Striplen.  61. 
Globe  Works,   Monument   Bank 

v.,  9,  32,  74,  100,  104,  162. 
Godbold  V.  Bank,  156. 
Goddard,  Root  v.,  70. 
Godfrey,  Metropolitan  Bank  v., 

85. 
Goff  V.  Great  Northern  R.  Co., 

162. 
Gogreve,  Barber  Paving  Co.  v., 

189. 
Gold  Mining  Co.  v.  National  Bank, 

76. 


Gold  Mountain  Co.,  Morrison  v., 

79. 
Goldsmith.  London  v.,  205. 
Goldthwaite,  Gibson  v.,  159. 
Goldworthy,  Smith  v.,  113. 
Gooch  V.  McGee,  86. 
Goodrich,  Commissioners  v.,  212. 
Goodrich  v.  Detroit,  50,  188, 
Good  speed  v.  East  Haddam  Bank, 

162,  164. 
Goodwnn  v.  Hardy,  124. 
Goodwin  v.  Ramsey  Co.,  230. 
Gordon  v.  Cornes,  225. 
Gordon  v.  Preston,  84, 
Gordon,  Proprietors,  etc.  v.,  77. 
Gordon's  Ex'rs  v.  Richmond,  etc. 

Co.,  119. 
Gorrell  v.  Life  Ins.  Co.,  96. 
Goszler  v.  Georgetown,  21,  203. 
Gottfried  v.  Miller,  91. 
Goundie  v.  Water  Co.,  81. 
Grady,  Ex  parte,  70. 
Grafton,  Andover  v.,  230. 
Graham  v.  Albert  Lea,  205. 
Graliam,  Lake  Co.  v.,  53. 
Graham,  National  Bank  v.,  163, 

163. 
Grand  Chute  v.  Winegar,  228. 
Grand    Junction,   etc.    Co.,    Ed- 
wards v.,  77. 
Grand  Junction,  etc.  Co.,  Haven 

v.,  135. 
Grand  Junction  Water  Works, 

Ware  v.,  53. 
Grand  Lodge  v.  Waddell,  70. 
Grand  Rapids,  Buford  v..  211. 
Grand  Rapids,  Clay  v„  207. 
Grand  Rapids,  Ely  v.,  ISO. 
Grand  Rapids,  McBride  v.,  189 
Grand  Rapids,  etc.  Co.  v.  Grand 

Rapids,  etc.  Co.,  170. 
Grand  Rapids    Elec.  Co.  v.   Gas 

Co.,  199. 
Grandjean,  Slidell  v.,  9. 
Granger  v.  Bassett,  124,  126. 
Granger,  Chaffee  v.,  188. 
Grangers',  etc.  Ins.  Co.  v.  Kamper, 

3,  109. 
Grant  v.  Davenport,  198,  217. 
Grant  v.  Erie,  202,  219. 
Grant  Co.  v.  Bradford,  175. 
Grant  Co.,  Richardson  v.,  191. 
Graves,  Goszler  v.,  215. 


TABLE   OF    CASES   CITED. 


XXXVll 


References  are  to  sections. 


Gray  v.  Jackson.  129. 

Great  Eastern  R}^,  Attorney-Gen- 
eral v.,  42.  43,  44,  47. 

Great  Luxemberg  R.  Co.  v.  Mag- 
nay,  153. 

Great  Northern  R.  Co.,Goff  v.,162. 

Great  Northern  R.  Co.  v.  Railway 
Co.,  137. 

Great  Northern  Ry.  Co.,  South 
Yorksliire,  etc.  R.  Co.  v.,  55, 
70, 137. 

Great  Western  Ry.  v.  Blake,  129. 

Great  Western  Ry,,  Bruffett  v., 
146. 

Great  Western,  etc.  Ry.  Co.,  Hoole 
v.,  118. 

Great  Western,  etc.  Ry.  Co.,  Mid- 
land Ry.  Co.  v.,  130. 

Great  Western,  etc.  Ry.  Co.,  Root 
v.,  129. 

Great  Western,  etc.  Ry.  Co.  v. 
Rushout,  53. 

Greeley  v.  Nashua  Sav.  Bank,  53. 

Greeley  v.  People,  185. 

Green  v.  Borough  of  Reading, 
203. 

Green  v.  Cape  May,  170,  194. 

Green,  Donovan  v.,  237. 

Green,  Hutchison  v.,  155. 

Green  v.  Omnibus  Co.,  162. 

Green,  State  v.,  146. 

Green,  Underwood  v.,  212. 

Green  Bay,  etc.  R.  Co.  v.  Union 
S.  S.  Co.,  9,  47,  53,  129,  136, 
137. 

Green  County  v.  Converse,  144. 

Green  County,  State  v.,  143. 

Greenbush,  Parr  v.,  190. 

Greenville,  Mauldin  v.,  231. 

Greenville  Compress  v.  Planters' 
Press,  72,  74,  143. 

Greenville,  etc.  Co.,  Wiswall  v.,  9. 

Greenwood  v.  Louisville,  219. 

Greer,  Pittsburg  v.,  220. 

Gregory  v.  Bridgeport,  188. 

Gregorj'-  v.  Jersey  City,  189. 

Gregory  v.  Patchett,  70. 

Greiner  v.  Ulerv,  101. 

Grilfin  v.  New  York,  206. 

Grimes  v.  Hamilton,  195. 

Griswold,  Arthur  v.,  158. 

Griswoldville,  Ward  v.,  107. 

Grove  v.  Fort  Wayne,  204. 


Grover  &  Baker  Co.,  Copley  v., 

162. 
Gruber  v.  Washington,  etc.  R.  Co., 

162,  163. 
Guaga  Iron  Co.  v.  Dawson,  166. 
Guaranty  Co.,  Jones  v.,  66. 
Gue  V.  Canal  Co.,  141. 
Guenther  v.  Devien,  69. 
Guest,  Eby  v.,  120. 
Guiness  v.  Corporation  of  Ireland, 

118. 
Gunness  v.  Land  Corporation,  55, 

56. 
Gunter  v.  Leckey,  69. 
Gurno,  St.  Louis  v.,  203. 
Guthrie  Co.,  Tracy  v.,  76. 

H. 

Haag  V.  Commissioners,  222. 

Habersham,  Jones  v.,  81,  93. 

Hackensack,  etc.  Co.  v.  De  Kay, 
134,  135,  168. 

Hackensack,  etc.  Co.,  Zabriskie  v., 
53. 

Hackett  v.  Ottawa,  227,  229. 

Hackettstown  v.  S  wackhamer,  96. 

Hadden  v.  Chorn,  94. 

Haddersfield,  Corporation  of  Ire- 
land v.,  86. 

Hadley,  Craigie  v.,  162. 

Hadley  v.  Commissioners,  8,  12. 

Haflford  v.  New  Bedford,  219. 

Hague  v.  Philadelphia,  194. 

Hale  V.  Houghton,  217. 

Hall,  Chicago,  etc.  Coal  Co.  v., 
146. 

Hall  V.  Paris,  53,  74. 

Hall,  Skinner  v.,  129. 

Hall  V.  Sullivan  R.  Co.,  141. 

Hall  V.  S%vansea,  74. 

Hallowell  Bank  v.  Hamlin,  159. 

Halsey,  Ackerman  v.,  158. 

Halstead  v.  Mayor,  175. 

Ham,  Railroad  Co.  v.,  144. 

Hamilton  v.  McLaughlin,  87. 

Hamilton  v.  New  Castle  R}'.  Co., 
96,  100,  128. 

Hamilton,  Vail  v.,  9. 

Hamilton  Co..  Grimes  v..  195. 

Hamlin,  Hallowell  Bank  v.,  159. 

Hamm,  McConnell  v.,  181. 


XXXVlll 


TABLE    OF    CASES    CITED. 


References  are  to  sections. 


Hammett  v.  Philadelphia,  225. 
Hammond  v.  Straus,  51,  168. 
Hammonton,  State  v.,  188. 
Hams,  New  Orleans,  etc.  R.  Co.  v., 

187. 
Hancock,  Clark  v.,  223. 
Hancock,  Gates  v.,  194. 
Hancock  v.  Holbrook,  83. 
Hancock,  Howson  v.,  74,  75. 
Handiey  v.  Stutz,  107,   109,  110, 

112,  117. 
Hankey,  Broadway  Co.  v.,  216. 
Hanmer,  Peninsular  Bank  v.,  77. 
Hannauer  Oil  Works,  Mallory  v., 

53,  70,  148. 
Hanover  Sav.  Ass'n,  Larwell  v., 

96. 
Hansborough,  Upton  v.,  51,  168. 
Hanser,  State  v..  173. 
Hanson,  Merchants'  Bank  v.,  53. 
Hanson  v.  Vernon.  181,  224 
Hapgood,  Penn.  Match  Co.  v.,  79. 
Harbeck  v.  Toledo,  183. 
Harding,  etc.  v.  Rockford,  223. 
Hardy,  Goodwin  v.,  124. 
Hardy  v.  Herri  weather,  100. 
HaFe  V.  London,  etc.  R.  Co.,  130. 
Harmock  v.  Farmers'  L.  &  T.  Co., 

131. 
Harned,  Manhattan  B.  Co.  v.,  127. 
Harper  v.  Emery,  225. 
Harrington,  Webster  v.,  198. 
Harris,  Denver,  etc.  R.  Co.  v.,  162. 
Harris  v.  McGregor,  3. 
Harris,  People  v.,  185. 
Harris  v.  Runnels,  69. 
Harris  v.  San   Francisco  R.   Co., 

126. 
Harrisburg,  Fisher  v.,  176,  207. 
Harrison  v.  State,  199. 
Hart,  Franklin  Ins.  Co.  v.,  79. 
Hartford,  Cone  v.,  207. 
Hartford,  Manchester  v.,  205. 
Hartford,  Portland  Ry.  Co.  v.,  235. 
Hartford,  etc.  Co.  v.  Sprague,  145. 
Hartford  Bridge  Co.  v.  East  Hart- 
ford, 187. 
Hartridge  v.  Rockwell,  120. 
Hartwell,  Jackson  v.,  15,  185. 
Harvey  v.  Chase,  100. 
Harvey,  Marble  Co.  v.,  72,  74, 123, 

136. 
Hasbrouck  v.  Milwaukee,  235. 


Hascall  v.  Life  Association,  100. 

Haskell,  Bank  v.,  161. 

Haskell  v.  New  Bedford,  208. 

Hastelow  v.  Jackson,  69. 

Hasty,  Baumgartner  v.,  212. 

Hat  Co.,  Priest  v.,  168. 

Hatch  V.  Barr,  87,  90. 

Hatch,  Collins  v.,  212. 

Hauger  v.  Des  Moines,  170. 

Haven  v.  Adams,  87. 

Haven  v.  Grand  June.  etc.  R.  Co., 

135. 
Hawkes,  Eastern  Counties    Ry. 

Co.  v.,  9,  52,  137. 
Hay,  Feitsam  v.,  137. 
Hayden,  Leland  v.,  120. 
Hayes  v.  Appleton,  170. 
Hayes  v.  Holly  Springs,  190,  224, 

229. 
Hayes  v.  Oshkosh,  219. 
Hayne,  Boardman  v.,  190. 
Haynes  v.  Covington,  201. 
Hayward  v.  Davidson,  81. 
Haywood  v.  Pilgrim  Society,  77. 
Hazlehurst  v.  Savannah  R.  Co., 

52,  121. 
Head  v.  Providence  Ins.  Co.,  21, 

28,  37?  47,  50,  70,  170. 
Heath  v.  Erie  R.  Co.,  53. 
Heath,  Fuller  v.,  196. 
Heathorn,  Benson  v.,  153. 
Heck  V.  McEwin,  3. 
Hedges  v.  Dixon  County,  73,  231. 
Hedges  V.  Paquett,  156. 
Hedley,  Williams  v.,  69. 
Heenrich  v.  Pullman  Co.,  163. 
Heineberg,  Page  v..  81. 
Heland  v.  Lowell,  171,  172. 
Helensburg,  Caledonian  Ry.   v., 

70,  79. 
Helfrich  v.  Williams,  164 
Heller  v.  Sedalia,  219. 
Hempsted,  North  Hempsted  v., 

187. 
Henckes  v.  Minneapolis,  205. 
Henderson  v.  Covington,  170, 175. 
Henley,  Mayor  v.,  220. 
Henley,  Warren  v.,  181. 
Hennesy  v.  St.  Paul,  53. 
Henry  Co.,  Redd  v.,  235. 
Hensley  v.  People,  225. 
Herkimer,  Ind.  etc.  M.  Co.  v.,  3. 
Herley,  Mayor  v.,  162. 


TABLE   OF   CASES   CITED. 


XXXIX 


Eeferences  are  to  sections. 


Heme  Bay,  Webb  v.,  134. 
Herrick,  Allen  v.,  127. 
Heurson  v.  New  Haven,  213. 
Hewison  v.  New  Haven,  204. 
Hewitt  V.  School  District,  223. 
Hicks,  Dry  DoQks  Co.  v.,  81. 
Hicks,  Mott  v.,  96,  100. 
Higert  v.  Green  Castle,  20o. 
High  tower  v.  Thornton,  106. 
Hiibert,  St.  Louis  Carriage  Co.  v., 

120. 
Hilbish  V.  Catherman,  181. 
Hildreth  v.  Lowell,  86. 
Hill  V.  Boston,  219. 
Hill  V.  Cliarlotte,  202. 
Hill  V.  City  of  Kahoka,  233. 
Hill  V.  Decatur,  177. 
Hill  V.  Nisbet,  121. 
Hill  Mfg.  Co.  V.  Railroad  Co.,  129. 
Hill  V.  Memphis,  223,  229,  237. 
Himmelmann  v.  Hoadley,  201. 
Hines  v.  Lockport,  202. 
Hinkley  v.  Gildersleeve,  9, 
Hitchcock  V.   Galveston,  62,  65, 

193,  196,  233. 
Hitchins  Bros.  v.  Maybard,  211. 
Hoadley,  Himmelmann  v.,  201. 
Hoag,  Sawyer  v.,  103. 
Hoboken,  Bridge  Proprietors  v.,  8. 
Hoboken,  North  Hudson  Co.  v., 

182. 
Hoboken.  State  v.,  182. 
Hodges  V.  Buffalo,  194 
Hodges  v.  Screw  Co.,  83,  122,  154, 

156. 
Hodgman  v.  Chicago,  etc.  R.  Co., 

235. 
Hodgson  V.  Powers,  53. 
Hoff,  Baker  v.,  69. 
Hoffman,  Moore  v.,  178. 
Hoffman,  etc.  Co.  v.  Cumberland, 

etc.  Co.,  153. 
Hogie    V.    People's    Association, 

120. 
Holbrook  v.  Bassett,  96. 
Holbrook,  Hancock  v.,  83. 
Holdsworth  v.  Evans.  70. 
Holland  v.  San  Francisco,  9,  14. 
Hollister,  Salt  Lake  City  v.,  9,  53, 

74,  163,  222,  233. 
Holly  Springs,  Hayes  v.,  190,  324, 

229. 
Holmes  v.  Johnson,  69,  71. 


Holmes  v.  Mead,  82. 

Holmes,  etc.  Mfg.  Co.  v.  Holmes, 

etc.  Co.,  121. 
Holt  V.  Bacon,  161. 
Holt,  Wahl  v.,  129. 
Holt  V.  Walworth,  107. 
Holt  V.  Winfield  Bank.  159. 
Home  V.  Boston  Carpet  Co.,  132. 
Home  V.  Freeman,  141. 
Home  V.  Keeler,  194. 
Home  Ins.  Co.,  Seiguouret  v.,  113. 
Homestead,  Blackshire  v.,  87. 
Hood  V.  Lynn,  175. 
Hood  V.  Railroad   Co.,  13,  29,  53, 

129,  164. 
Hooker  v.  Eagle  Bank,  77. 
Hoole  V.  Great  Western  R.  Co., 

118. 
Hooper  v.  Ely,  198. 
Hope  V.  International  Co.,  120. 
Hopkins  v.  Swan  son,  172. 
Hopkins  v.  Turnpike  Co.,  88. 
Hopkins,  Yancey  v.,  190. 
Hopkinton,  Claflin  v.,  175. 
Hopper  v.  Covington,  224. 
Horn  V.  Baltimore,  201. 
Horn  V.  People,  171. 
Horton  v.  Thompson,  194. 
Hosmer,  Detroit  v.,  189. 
Hoth,  United  States  Bank  v.,  83, 

100. 
Hough  V.  Cook  Co.,  81. 
Houghton  V.  Dodge,  77. 
Houghton,  Hale  v.,  217. 
Housa tonic  R.  Co.,  Bridgeport  v., 

170.  177. 
House,  ImhoiT  v.,  74,  75. 
House  V.  Montgomery  Co.,  204. 
Household  Mach.   Co.,   Anthony 

v.,  119. 
Houston,  Gabel  v.,  172. 
Houston  &  T.  C.  R.  Co.  v.  Shirley, 

142,  144. 
Hovelman   v.  Kansas  Citv,   etc. 

Co.,  216. 
Hovey  v.  Mayo,  177,  203. 
Howard,  American  Academy  v., 

94. 
Howard,  Bermeister  v.,  172. 
Howard,  Chicago,  etc.  Co.  v.,  96, 

136. 
Howard,  Railroad  Co.  v.,  9. 
Howard  v.  San  Francisco,  219. 


3d 


TABLE   or   CASES   CITED. 


References  are  to  sections. 


Howard,  Stein  v.,  115. 

Howard,  Thornton  v.,  94. 

Howard,  White  v.,  82. 

Howe,  In  re,  93. 

Howe,  N.  Y.  Inst,  v.,  95. 

Howe,  Brown  &  Co.,  Tool  Co.  v., 

84. 
Howe  Machine  Co.,  Carter  v.,  162. 
Howe  Machine  Co.,  Webster  v., 

104. 
Howson  V.  Hancock,  74,  75. 
Hoyle  V.  Plattsburg,  etc.  R.  Co., 

153. 
Hoyt,  East  River  Bank  v.,  154. 
Hoyt,  Reed  v.,  91. 
Hoyt.  Thompson  v.,  159. 
Hubbard  v.  Concord,  205. 
Hubbard  v.  Investment  Co.,  55. 
Hubbardston,  Stone  v.,  205. 
Hudson,  York,  etc.  R.  Co.  v.,  153. 
Hudson  Co.  Ins.  Co.,  Durar  v.,  77. 
Hughes,  Flack  v.,  235. 
Huguenot  Mfg.  Co.,  Chamberlin 

v.,  51,  168. 
Huidekoper,  Daviess  Co.  v.,  227. 
Hull  Glass  Co.,  Smith  v.,  77. 
Humboldt  v.  Long,  53. 
Humboldt  M.  Co.  v.  Am.  Com.  Co., 

136. 
Humes  v.  Mayor,  203,  204. 
Humphrey  v.  Patrons'  Mer.  Ass'n, 

77,  168. 
Hunt,  Barber  Asphalt  Paving  Co. 

v.,  189. 
Hunt  V.  Boonville,  208. 
Hunt,  Eaton,  etc.  Co.  v.,  145. 
Hunt  v.  Knickerbocker,  69,  71. 
Hunter,  Dougherty  v.,  159. 
Huntoon,  City  of  Topeka  v.,  177. 
Hurford  v.  Omaha,  170. 
Hussey  v.  King,  164. 
Hussey  v.  Norfolk  R.  Co.,  162. 
Hutchins  v.  Byrnes,  87,  90. 
Hutchins.  Lake  Shore,  etc.  R.  Co. 

v.,  146. 
Hutchinson  v.  Concord,  204. 
Hutchinson  v.  Green,  155. 
Huthsing  v.  Bousquet,  190. 
Hutson  V.  Mayor,  204. 
Hyde  Park  v.  Oakwood,  183. 
Hydes  v.  Joyes,  173. 
Hydraulic   Co.,   Citizens'  Water 

Co.  v.,  216. 


Ice  Co.,  Mott  v.,  164. 
Illinois,  Turnpike  Co.  v.,  8, 
Illinois  Canal  Co.  v.  St.  Louis,  215.- 
Illinois  Cent.  R.  Co.  v.  Downey, 

164. 
Illinois  Cent.  R.  Co.  v.  Franken- 

berg,  129. 
Illinois  Cent.  R.  Co.  v.  Johnson, 

129. 
Imhoff  V.  House,  74,  75. 
Ind.  Car  Co.  v.  Parker,  210. 
Ind.  etc.  Co.,  Indianapolis  v.,  170, 

188. 
Ind.  Roll.  Mill  Co.  v.  Railroad  Co., 

159. 
Indiana,  etc.  R.  Co.,  Ohio,  etc.  R. 

Co.  v.,  137. 
Indianapolis  v.  Gas,  etc.  Co.,  172, 

217. 
Indianapolis  v.  Ind.  etc.  Co.,  170, 

188. 
Indianapolis  v.  Scott,  210. 
Indianapolis  v.  Tate,  211. 
Indianapolis  Ins.  Co.,  Ray  v.,  101. 
Indianapolis,  etc.  M.  Co.  v.  Herki- 
mer, 2. 
Indianapolis,  etc.  R.  Co.  v.  Jones, 

146. 
Indianapolis,  etc.  R.  Co.,  Mowrey 

v.,  144. 
Indianapolis,  etc.  R.  Co.,  Smead 

v.,  9,  96. 
Inhabitants,   etc.,  Allen  v.,  170, 

224. 
Inhabitants,  etc.  v.  Cole,  81. 
Inhabitants,  etc.  v.  Commission- 
ers, 86. 
Inhabitants,  etc..  Dill  v.,  201. 
Inhabitants,  etc.  v.  Field,  211. 
Inhabitants,  etc.,  Morrison  v.,  134. 
Inhabitants,  etc.  v.  New  Orleans, 

177. 
Inhabitants,  etc.,  Prout  v.,  195. 
Inman  v.  Tripp,  211. 
In  re  Addleston  Co.,  117. 
In  re  Albert  Association  Co.,  187. 
In  re  Assurance  Co..  168. 
In  re  Almada  &  Tirito  Co.,  117. 
In  re  Bangor  &  State  Co.,  148. 
In  re  Bank  of  Hindustan,  142. 
In  re  Barrow,  etc.  Co.,  114. 


TABLE    OF   CASES    CITED. 


xli 


References  are  to  sections. 


In  re  Bridge  water  Nav.  Co.,  119. 
In  re  British  Life  Ins.  Co.,  123. 
In  re  Building  Society,  70. 
In  re  Cork,  etc.  R,  Co.,  53,  73,  74, 

96. 
In  re  Corporation  of  Haddersfield, 

86. 
In  re  Ebbw.  Vale,   etc.  Co.,   109, 

113. 
In  re  Empire  Assurance  Corpora- 
tion, 142. 
In  re  Eureka  Basin  Co..  181. 
In  re  Faui'e  Elec.  Co.,  154. 
In  re  Financial  Corporation,  118. 
In  re  Gatling  Gun,  114. 
In  re  German  M.  Co.,  96. 
In  re  Howe,  93. 
In  re  Insurance  Co.,  120. 
In  re  International  Ins.  Co.,  96. 
In  re  London,  etc.  R.  Co.,  120. 
In  re  Marseilles,  etc.  Co.,  120. 
In  re  Mt.  Washington,  etc.   Co., 

86. 
In  re  New  York,  etc.  Co.,  8. 
In  re  Northern  Coal  Min.  Co.,  120. 
In  re  Plioenix  Co.,  74. 
In  re  Pyle  Works,  125. 
In  re  Quebrada  Ry.,  114. 
In  re  Sage,  145. 

In  re  Sankey  Brook  Coal  Co.,  125. 
In  re  Sea  Foam,  etc.  Ins.  Co.,  74. 
In  re  Union  Plate  Glass  Co.,  114. 
In  re  United  Service  Co.,  120. 
In  re  Washington  Avenue,  225. 
In  re  Weymouth  Packet  Co.,  117. 
Insurance  Co.,  -(Etna  Nat.  Bank 

v.,  136. 
Insurance  Co.,  Agar  v.,  160. 
Insurance  Co.,  Attorney-General 

v.,  100. 
Insurance  Co.,  Beatty  v.,  47. 
Insurance  Co.,  Blair  v.,  100. 
Insurance  Co.,  Chetlain  v.,  120. 
Insurance  Co.,  Farmers',  etc.  Co. 

v.,  92. 
Insurance  Co.,  Jones  v.,  172. 
Insurance  Co.,  Kennebec  Co.   v., 

166. 
Insurance  Co.,  Life  &  Fire  Ins. 

Co.  v.,  162. 
Insurance  Co.,  Liverpool,  etc.  Co. 

v.,  9. 
Insurance  Co.,  Maynard  v.,  162. 


Insurance  Co.,  McCullough  v.,  168. 
Insurance  Co.,  Mumford   v.,  100. 
Insurance  Co.,  Nichol  v.,  160. 
Insurance  Co.,  Ramsey  v.,  168. 
Insurance  Co.,  Smith  v.,  70. 
Insurance  Co.,  Southall  v.,  148, 
Insurance  Co.,  Susquehanna,  etc. 

Co.  v.,  84. 
Insurance  Co.,  Vance  v.,  156. 
Insurance  Co.,  Williams  v.,   163. 
International,    etc.    Co.    v.   Bre- 

mond,  143. 
International,  etc.  Co.,  Hope  v., 

120. 
International,  etc.  Co.,  Kentle  v., 

163. 
International,  etc.  Co.  v.  United 

States,  77. 
Investment  Co.,  Hubbard  v.,  155. 
lola,  Commercial   Bank  v.,  181, 

225,  237. 
Iowa  City,  Clark  v.,  135. 
Iowa  Lumber  Co.  v.  Foster,  120. 
Iowa  Mountain  Bank  v.  Mercan- 
tile Bank,  162. 
Irish  V.  Railroad  Co.,  129. 
Iron  R.  Co.  v.  Ironton,  86. 
Irvine  v.  Union  Bank.  78. 
Isham  V.  Bennington  Ins.  Co.,  90. 
Ithica,  Saulsbury  v.,  205. 
Ives  V.  Smith,  131. 


J. 

Jackson  v.  Bowman,  215. 
Jackson  v.  Brown,  84,  85. 
Jackson,  Denton  v.,  3. 
Jackson,  Gray  v.,  129. 
Jackson  v.  Hartwell,  15,  185. 
Jackson,  Hastelow  v.,  69. 
Jackson's  Adm"rs  v.  Plank  Road 

Co.,  124. 
Jacksonville,  Dorman  v.,  203. 
Jacksonville  v.  McConnel,  47. 
Jacksonville,  Murphy  v.,  175. 
Jacobs,   Union  Bank  v.,   96,  98, 

100. 
James  v.  Portage,  200. 
Janesville.  Crossett  v.,  203. 
January,  Commissioners  v.,  238. 
Jasper  County,  Anthony  v.,  226. 
Jefferson  County  v.  Arrighi,  194. 


xlii 


TABLE   OF   CASES    CITED. 


References  are  to  sections. 


Jeffersonville,  Bissell  v.,  193. 
Jeflfersonville,  Coal  Float  v.,  176. 
Jeffersonville,  Shallcross  v.,  175. 
Jenkins  v.  Andover,  234. 
Jenkins,  Dranesburg  v.,  237. 
Jermain  v.  Lake  Shore   R.   Co., 

124. 
Jersey  City,  Banking  Co.  v.,  178. 
Jersey  City,  Gregory  v.,  189. 
Jersey  City,  Keeney  v.,  189. 
Jersey  City,  McConvill  v.,  175. 
Jersey  City,  Rouede  v..  227. 
Jersey  City,  State  v.,  173, 174, 176, 

235. 
Jersey  City,  Trapshagen  v.,  207. 
Jessup,  Branch  v.,  9,  53. 
Jeverin  v.  Eddy,  206. 
Jewett  V.  New  Haven,  219. 
John  V.  Farmers'  Bank,  101. 
Johnson,  Cass  County  v.,  227. 
Johnson  v.  Dispatch  Co.,  162, 
Johnson  v.  District  of  Columbia, 

208. 
Johnson,  Holmes  v.,  69,  71. 
Johnson.  Ill,  Cent.  R.  Co.  v.,  129. 
Johnson,  Kean  v.,  137. 
Johnson,  Musser  v.,  87. 
Johnson,  ^Northern  Bank  v.,  161. 
Johnson  v.  Philadelphia,  215. 
Jolmson   V.  Slirewsbury,  etc.  R. 

Co.,  71,  137. 
Johnson  v.  Utica  Water  Works, 

86. 
Johnson,  Wood  v.,  96,  100. 
Johnson  County   v.  McClintock, 

235. 
Johnston  v.  Charleston,  206. 
Johnston,  Meyer  v.,  142. 
Johnston  Harvester  Co.  v.  Clark, 

168. 
Johnston,  etc.  R.  Co.,  Abbott  v., 

137. 
Joint   Co.  V.  Delaware   Bay  Ry. 

Co.,  8. 
Joint-Stock  Co.  v.  Brown,  122, 158. 
Jones  V.  Bank,  168. 
Jones  V.  Guaranty  Co.,  66. 
Jones  V.  Habersham,  81,  93. 
Jones  V.  Ind.  etc.  R.  Co.,  146. 
Jones  V.  Insurance  Co.,  172. 
Jones  V.  New  Haven,  220. 
Jones,  Quincy  v.,  203, 
Jones  V.  Richmond,  188. 


Jones,  Stewart  v.,  141. 
Jones  V.  Terre  Haute  R.  Co.,  124. 
Jones,  Wetherell  v.,  55. 
Jordon  v.  Alabama  R.  Co.,  162. 
Jordon,  Christian  Union  v,,  78. 
Joy,  Allen  v„  181,  225, 
Joy,  Bean  v.,  195, 
Joy  V,  St,  Louis,  128,  146, 
Joyes,  Hydes  v,  173. 
Junction  R,  Co,,  Cleneay  v,,  135. 
Junction  R.  Co,,  McCrary  v.,  53, 
147. 

K. 

Kaine,  St.  Louis  v„  172. 
Kaist  V,  St,  Paul.  203, 
Kalamazoo,  Gale  v,,  173,  215. 
Kalamazoo,  Shelden  v,,  162, 
Kamper,  Grangers'  Ins.  Co.  v.,  3, 

107. 
Kane  v.  Fond  du  Lac,  195. 
Kankakee,  Bissell  v.,  181,  225. 
Kansas  City  v.  Flanagan,  170. 
Kansas  City  v.  Kiley,  213. 
Kansas,   etc.   Co.,   Hovelman  v., 

216. 
Kean  v.  Johnson,  137. 
Kean  v.  Van  Reuth,  168. 
Keeler,  Howe  v.,  194. 
Keeler,  Mead  v.,  100. 
Keeney  v.  Jersey  City,  189. 
Keithburg  v.  Frick,  238. 
Keller  v.  Leavenworth,  230. 
Kelley,  Louisville  R.  Co.  v.,  163. 
Kelley  v.  Milan,  223. 
Kelly  v.  Calhoun,  89. 
Kelly,  Case  v.,  81,  85. 
Kelly  V.  Mayor,  etc.,  96,  100. 
Kelly  V.  Meeks,  170. 
Kelly  V.  Milwaukee.  177. 
Kendall  Co.,  Post  v.,  190. 
Kennebec  Co.  v.  Insurance  Co., 

166. 
Kennedy  v.  Cochran,  69. 
Kennedy  v.  Phelps,  212. 
Kennicott  v.  Supervisors,  228. 
Kenosha,  Paul  v..  74,  191. 
Kent  V.  Quicksilver  M.  Co.,  96, 

106.  124,  127. 
Kentle,  International,  etc.  Co.  v., 

163. 
Keokuk,  Creal  v.,  201. 


TABLE    OF   CASES   CITED. 


xliii 


References  are  to  sections. 


Keokuk  v.  Ft.  Wayne  Elec.  Co., 

137. 
Keokuk  v.  Scroggs,  170. 
Keokuk,  etc.   Bridge   Co.,  Pitts- 
burg, etc.  R.  Co.  v.,  9,  47,  53, 

53,  54,  69,  74,  76. 
Keokuk  Packing  Co.,  Buford  v., 

83,  121. 
Keokuk,   etc.    R.    Co.,    State    v., 

144. 
Keokuk  Water  Works,  Becker  v., 

219. 
Kep,  Utica  Ins.  Co.  v.,  69. 
Kepner  v.  Commonwealth,  171. 
Kerchner  v.  Gettys,  166. 
Kernaghan  v.  Williams,  53. 
Kernesville  Mfg.  Co.,  Blalock  v., 

120. 
Kerr,  Trov.  etc.  R.  Co.  v.,  137. 
Kersey  Oil  Co.  v.  Oil   Creek  R. 

Co.,  139. 
Ketchum  v.  Buflfalo,  100, 185, 188. 
Ketchum,  N.  Y.  etc.  Co.  v.,  79. 
Keyser  v.  School  District,  77. 
Kiel,  Morris  v.,  87. 
Kiley,  Kansas  City  v.,  213. 
Killam,  Lawrence  v.,  188. 
King  V.  Davenport,  212. 
King,  Hussey  v.,  164. 
King  V.  Patterson,  124,  126. 
King,  Phillips  Academy  v.,  92. 
King,  Trustees  v.,  95. 
King,  Warren  v.,  119. 
King,   Wood  Hydraulic    Co.   v., 

166. 
King  Mountain  Min.  Co.,  Nason 

v.,  87. 
King's  College,  Festial  v.,  124. 
Kinmundy  v.  Mayham,  173. 
Kinzie  v.  Chicago,  47. 
Kip,  N.  Y.  etc.  R.  Co.  v.,  86. 
Kip  V,  Paterson,  176. 
Kipp  V.  Mayor,  176. 
Kirkham  v.  Russell,  170,  176. 
Kneeland,  Lathrop  v.,  109. 
Kneeland  v.  Milwaukee,  189. 
Kneeland,  Tombigbie  v.,  165,  166. 
Knickerbocker,  Hunt  v.,  69,  71. 
Knight  V.  Corporation,  168. 
Knitting  Co.,  Caudy  v.,  162. 
Knowler,  Beaty  v.,  8,  12,  47. 
Knowlton  v.  Congress,  etc.  Co., 

109,  119. 


Knowlton,  Spring  Co.  v.,  69,  73, 

138. 
Knox  Co.  V.  Aspinwall,  135,  190, 

193,  227,  238. 
Knox  Ins.  Co.,  Ogilvie  v.,  108. 
Kohnor,  Chemical  Bank  v.,  161. 
Konrad  v.  Rogers,  185. 
Krightly,  Oliver  v.,  198. 
Krouse,  Centralia  v.,  206. 
Krulevitz  v.  Railroad  Co.,  163. 
Kyle  V.  Railroad  Co.,  129. 

L. 

Lacey,  Excelsior  Co.  v.,  156. 

Lacey,  Orr  v.,  70. 

Lacon,  Barnes  v.,  337. 

La  Crosse  R.  Co.,  Bronson  v.,  53. 

Lafayette,  Allen  v.,  333. 

Lafayette  v.  Cox,  9. 

Lafayette  Ave.  Bank  v.  St.  Louis 
S.  Co.,  9. 

Lafayette  R.  Co.,  Tippecanoe  Co. 
v.,  53,  78. 

Laflin,  Chicago  v.,  212. 

La  Grange,  Cole  v.,  181,  325. 

Laing  v.  Reed,  98. 

Laing,  Solomon  v.,  53,  121. 

Laird  v.  De  Sota,  233. 

Lake,  Terre  Haute  v.,  301. 

Lake  County  v.  Grahain,  53. 

Lake  County,  Sutliff  v.,  53. 

Lake  Crystal,  Estelle  v.,  205.  206. 

Lake  Erie  Ins.  Co.,  Valley  R.  Co. 
v.,  121. 

Lake  Erie,  etc.  R.  Co.  v.  Acres,  163. 

Lake  Erie,  etc.  R.  Co.,  Paine  v., 
144,  146. 

Lake  Shore,  etc.  R.  Co.,  Board- 
man  v.,  124. 

Lake  Shore,  etc.  R.  Co.  v.  Hutch- 
ins,  146. 

Lake  Shore,  etc.  R.  Co.,  Jermain 
v.,  126. 

Lake  Shore,  etc.  R.  Co.,  Sage  v., 
145. 

Lake  View  v.  Letz,  212. 

Lamb  v.  Cecil,  91. 

Lamb,  Powder  River,  etc.  Co.  v., 
74,  75. 

Lambert,  Thompson  v.,  96. 

Lamm  v.  Deposit  Association,  194 


xliv 


TABLE   OF   CASES   CITED. 


References  are  to  sections. 


Lamont,  Thompson  v.,  84. 
Lampkin,  Nebraska  City  v.,  203. 
Lamson,  Boom  Co.  v.,  3. 
Lancaster,  Miller,  etc.  R.  Co.  v., 

144. 
Lancaster,  Savanna  R.  Co.  v.,  96. 
Lancaster,  Steck  v.,  200. 
Land  V.  Coffmann,  81. 
Land  Credit  Co.  v.  Lord  Fermoy, 

158. 
Land  Corporation  of  Ireland,  Gun- 

niss  v.,  55,  56. 
Land  &  Improvement  Co.,  Bridge 

Co.  v.,  8. 
Lane's  Case,  110. 
Langstone  v.  S.  C.  R.  Co.,  135. 
Lanier,  Southern  Ins.  Co.  v.,  14, 74. 
Lansing  v.  Toolan,  202. 
Laramie  Co.  v.  Albany  Co.,  186. 
Larned,  Randolph,  v.,  141. 
Larue,  Minturn  v.,  170,  199. 
Larwell     v.     Hanover     Savings 

Bank,  96. 
Lathrop,  Commercial  Bank  v.,  81. 
Lathrop  v.  Kneeland,  109. 
Laughton  v.  Hughes,  71. 
Lauman  v.  Lebanon  V.  R.  Co., 

137,  142,  144,  147. 
Law  V.  People,  196,  197,  231. 
Lawrence  v.  Killam,  188. 
Lawrence,  Morrison   v.,  213,  222. 
Layten,  Osgood  v.,  108. 
Lead  Co..  Mechanics'  Association 

v.,  100. 
Leasure   v.  Life    Insurance  Co., 

IGO. 
Leavenworth,  Keller  v.,  230. 
Leavenworth  v.  Miller,  225. 
Leavitt,  Curtis  v.,  13,  74,  96,  98, 

100. 
Leavitt  v.  Palmer,  74. 
Leazure  v.  Hillegas,  81. 
Lebanon  Co.,  Currier  v.,  120,  137, 

143,  144. 
Lebanon  V.  R.  Co.,  Lauman  v., 

137,  142,  144,  147. 
Leckey,  Gunter  v.,  69. 
Le  Claire,  Springfield  v.,  220. 
Le  Couteulx  v.  Buffalo,  185. 
Lee,  Morris  v.,  157,  158. 
Lee,  Thompson  v.,  238. 
Leech,  Waters  v.,  176. 
Le  Fevre,  Carr  v.,  135. 


Legg,  Board  of  Commissioners  v.^ 

210. 
Leggett  v.  Banking  Co.,  84. 
Leggett  V.  New  Jersey  Mfg.  Co., 

8,  13. 
Lehigh  Canal  Co.,  Brown  v.,  124. 
Lehigh  Water  Co.'s  Appeal,  216. 
Lehman  v.  Tallassee  Mfg.  Co.,  105, 

135. 
Leland  v.  Hay  den,  120. 
Leo  V.  Union  Pacific  R.  Co.,  105. 
Leonard  v.  Canton,  170. 
Lessee,  etc.,  Runyan  v.,  81. 
Leslie  v.  St.  Louis,  86. 
Le  Sueur  Mill  Co.,  Auerbach  v., 

81. 
Letz,  Lake  View  v.,  212. 
Levy,  Life  Association  v.,  166. 
Levy,  Mayor  v.,  213. 
Lewis  V.  Bank  of  Kentucky,  167. 
Lewis  V.  Clarendon,  237. 
Lewis,  Commanche  Co.  v.,  228. 
Lewis  County  Bank,  Donnell  v., 

96. 
Lewistown   Inst,   etc.,    Franklin 

Co.  v.,  9,  34,  53,  55,  70,  121. 
Lex,  Whitman  v.,  95. 
Lexington  v.  Butler,  228. 
Life  Association,  Boogher  v.,  162. 
Life  Association,  Hascall  v.,  100. 
Life  Association  v.  Levy,  166. 
Life  Association,  Twiss  v.,  74. 
Life,  etc.  Insurance  Co.,  Gorrell 

v.,  96. 
Life  Insurance  Co.  v.  Insurance 

Co.,  162. 
Life  Insurance  Co.,  Leasure  v., 

166. 
Light  Co.,  Gas  Co.  v.,  199. 
Lightner  v.  Boston,  etc.  R.  Co., 

146. 
Lincoln,  Fulton  v.,  170. 
Lincoln  Co.,  U.  P.  R.  Co.  v.,  235. 
Lincoln,  etc.  R.  Co.,  Peters  v.,  137. 
Lincoln  Savings  Bank  v.  Ewing, 

92. 
Lionberger  v.  Broadway  Bank,  91. 
Lime  Co.,  Denike  v.,  143. 
Litchfield  v.  Ballon,  233. 
Litchfield,  Buchanan  v.,  196,  224, 

228.  233. 
Litchfield,  Dubuque,  etc.  Co.  v.,  9. 
Little  V.  O'Brien,  74,  75. 


TABLE    OF   CASES    CITED, 


xlv 


References  are  to  sections. 


Little  Rock,  Vance  v..  170. 

Littlevvort  v.  Davis,  70. 

Livinorston  County  v.  Weider, 
235. 

Livingstone  v.  Temperance  So- 
ciety. 120. 

Liverpool,  etc.  Co.  v.  Insurance 
Co.,  9. 

Llanelly  Ry.  v.  London,  etc.  R. 
Co.,  180, 

Lloyd  V.  Bank,  160. 

Loan  Association  v.  Topeka,  179, 
181,  224,  225,  238. 

Loan  Co.,  Marchaud  v.,  79. 

Lock  Co.  V.  Railroad  Co.,  129. 

Lockhart  v.  Van  Alstyne,  124. 

Lockport,  Hines  v.,  202. 

Lockwood,  Peck  v.,  212. 

Lockwood,  Railroad  Co.  v.,  9, 

Lockwood  V.  St.  Louis,  177. 

Logan  City  v.  Buck,  170, 

Logan  County  Bank  v.  Town- 
send,  74. 

Lombard,  School  District  v.,  230. 

London  v.  Goldsmith,  205. 

London,  Stuart  v.,  77. 

London  Bldg.  Soc,  Collerne  v., 
120. 

London  Omnibus  Co.,  Green  v., 
162. 

London,  etc.  R.  Co.,  Hare  v., 
130. 

London,  etc.  R.  Co.,  In  re,  120. 

London,  etc.  R.  Co.,  Llanelly  Ry. 
v.,  130. 

Long,  Cowgill  v.,  238. 

Long,  Humboldt  v.,  53. 

Longstreet,  Crawford  v.,  81. 

Lookout  Water  Co.,  Foster  v., 
219. 

Lord  V.  Oconto,  170,  173. 

Lord  Fermoy,  Credit  Co.  v.,  158. 

Los  Angeles,  Og  v.,  219. 

Los  Angeles,  etc.  R.  Co.,  Smith 
v.,  146. 

Los  Angeles  Water  Co.  v,  Los  An- 
geles, 217, 

Louisiana  v.  New  Orleans,  204, 
233, 

Louisiana  v.  Wood,  191,  233. 

Louisiana  Light  Co.,  New  Orleans 
G.  L.  Co.  v.,  216. 

Louisiana  Ry.,  Richmond  Ry.  v.,  8. 


Louisiana  State  Bank  v.  Orleans 

Nav.  Co.,  47,  170. 
Louisville  v.  Bank,  215. 
Louisville  v.  Commissioners,  185. 
Louisville,  Greenwood  v.,  219. 
Louisville,  Murphy  v.,  201. 
Louisville,  Pollock  v.,  219, 
Louisville  v.  University,  185, 
Louisville  v.  Weible,  216. 
Louisville,  etc.  R.  Co,  v.  Boney, 

146. 
Louisville,  etc.  R.  Co.  v.  Caldwell, 

100. 
Louisville,  etc.  R.  Co.   v.  Flam- 
ming, 163. 
Louisville,   etc,   R.  Co,  v.  Kelly, 

163. 
Louisville,  etc,  R,  Co.  v.  Loui.s- 

ville,  215, 
Lovette  v.  Sawmill  Association, 

89. 
Loving,  Brannen  v.,  159. 
Low  V.  Central  Pac,  R.  Co.,  9, 186, 
Low,  Smith  v.,  96. 
Lowell  V.  Boston,  69, 179,  181,  225. 
Lowell,  Bridenbecker  v.,  161. 
Lowell,  Drake  v.,  204. 
Lowell,  Heland  v.,  171,  172. 
Lowell,  Hildreth  v.,  86. 
Lowell,  Proprietors,  etc.  v.,  218. 
Lucas  V.  Pitney,  96,  100. 
Lucas  V.  White  Line  Transp,  Co., 

4,  9,  38,  52,  70. 
Ludlow,  Ferris  v.,  109. 
Lumbai'd  v.  Aldrich,  81. 
Lumber  Co.,  Tenney  v.,  88. 
Lumsden  v.  Cross,  225, 
Luthe  V.  Farmers'  Ins.  Co.,  53, 
Lyde  v.  East  Bengal  R.  Co.,  53. 
L3mch  V.  Eastern,  etc.  R.  Co.,  285. 
Lynch  v.  New  York,  208,  211. 
Lynch,  Sheidley  v.,  177, 
Lynchburg,  Peters  v.,  170. 
Lynn,  Hood  v.,  175. 
Lyons  County,  Clark  v.,  194. 

M. 

M.  &  P.  R,  Co.,  Bryan  v„  129. 
Mabel,  Titus  v,,  181. 
Mabry,  Shea  v.,  156. 
Mackay  v.  Bank,  162. 


xlvi 


TABLE    OF   CASES   CITED. 


References  are  to  sections. 


Maddox,  Pollard  v.,  141. 
Mad  River  R.  Co.,  Weeden  v.,  77. 
Madison,  Bearden  v.,  172. 
Madison,  State  v.,  81,  185. 
Madison,  Weis  v.,  211. 
Madison,  etc.  P.  Rd.  Co.  v.  Water- 
town,  etc.  Co.,  9,  99.  136. 
Madison,   etc.  R.  Co.,  Pearce  v., 

9,  30,  52,  53,  70,  143,  148. 
Magee  v.  Mokelumne,  etc.  Co.,  96, 

98,  100. 
Magnay,  Great  Luxemburg  R.  Co. 

v.,  153. 
Maher  v.  Chicago,  74,  191. 
Mahoney  v.  Mining  Co.,  168. 
Mahoney  v.  State,  3. 
Mahoney  Min.  Co.  v.  Anglo-Cal. 

Bank,  96,  98. 
Maine  Cent.  R.  Co.  v.  Maine,  144, 

146,  148. 
Mallett  V.  Simpson,  81. 
Mallory  v.  Hannauer  Oil  Works, 

53,  70,  148. 
Maloney,  Dubuque  v.,  212. 
Manchester  v.  Hartford,  205. 
Manchester,  Ray  v.,  204. 
Manchester,  etc.  Co.,  Cass  v.,  53. 
Manchester  Canal  Co.,  Cunliffe  v., 

53. 
Manchester,  etc.  R.  Co.,  Chambers 

v.,  70,  134. 
Manchester,  etc.  R.  Co.  v.  Con- 
cord, etc.  R.  Co.,  130. 
Manchester  Water  Co.,  Brough- 

ton  v.,  50. 
Manderchid  v.  Dubuque,  200. 
Manhattan  Beach  Co.  v.  Harned, 

127. 
Mankato,  Phelps  v.,  200. 
Mansfield  v.  Moore,  205. 
Mansfield,  State  v..  81. 
Manufacturing  Co.,  Gas  Co.  v., 

144. 
Manufacturing  Co.,  Railroad  Co. 

v.,  129. 
Manufacturing  Co.,  Smith  v.,  156. 
JIanufacturing  Co.,  White  v.,  79. 
Marble  Co.  v.  Harvey,  136. 
March  v.  Eastern,  etc.  R.  Co.,  124. 
Marchand  v.  Loan  Co.,  79. 
]\Iarcy,  Elwood  Township  v.,  238. 
Marcy  v.  Oswego,  53. 
Marcy,  Sumner  v.,  122. 


Mariaville,  Emery  v.,  230. 
Marietta,  etc.   R.  Co.,  Atkinson 

v.,  9. 
Marietta,  etc.  R,  Co.,  Campbell  v., 

137. 
Marietta,  etc.  R.  Co.  v.  Elliott,  9. 
Marine  Bank.  Ballston  Bank  v., 

161. 
Marion  Co.,  State  v.,  170. 
Markham.  Comm.  v.,  182. 
Marks  v.  Purdue  University,  225. 
Marquette  v.  Cleary,  202. 
Marseilles.  Chicago,  etc.  R.  Co.  v., 

120. 
Marseilles,  etc.  Co.,  In  re,  120. 
Marsh  v.  Callender,  203. 
Marsli  v.  Fulton  County,  190, 191, 

193,  194,  201,  224.  233. 
Marsh  v.  N.  Y.  etc.  R.  Co.,  146, 
Marshall,  Downing  v..  82. 
Marshall,  Forbes  v.,  96. 
Marshall,  Turquand  v.,  158. 
Marshalltown,  Bellmeyer  v.,  9. 
Martin  v.  Mayor,  215.  ' 
Martin  v.  Mobile,  etc.  R  Co.,  166. 
Martin,  Rochester  Ins.  Co.  v.,  9. 
Martin,  State  v.,  195. 
Martin  v.  Webb,  160. 
Marvin  Safe  Co.  v.  Ward,  219. 
Marvland,  Phil.  etc.  R.  Co.  v.,  146, 

148. 
Mason,  Greenville  v.,  186. 
Mason  v.  M.  E.  Church,  93. 
Mason  v.  Shawnee,  172. 
Mason  City,  Noyes  v.,  203. 
Massey  v.  Building  Association, 

101. 
Mather  v.  Ottawa,  170,  225. 
Mathes  v.  Cameron.  230. 
Mathews  v.  Alexander.  173. 
Mathews,  National  Bank  v.,  53, 67. 
Mathews  v.  Skinner,  9. 
Maude,  Ex  parte,  117. 
Mauldiu  v.  Greenville,  231. 
Maund    v.    Monmouthshire    Co., 

162. 
Maupin  v.  Franklin  Co.,  190. 
Mawhood,  Smith  v.,  55. 
May,  People  v.,  196. 
Maybard.  Hitchins  Bros,  v.,  21L 
Mayer,  Western  Union  Ins.  Co. 

v.,  106. 
Mayham,  Kinmundy  v.,  173. 


TABLE    OF   CASES    CITED. 


xlvU 


References  are  to  sections. 


Maynard  v.  Insurance  Co.,  162. 

Mayo,  Hovey  v.,  177. 

Mayor  v.  Baltimore,  etc.  R.  Co., 

128. 
Mayor,  Bateman  v.,  50,  188. 
Mayor  v.  Beasley,  176. 
Mayor,  Bigler  v.,  189. 
Mayor,  Blake  v.,  170. 
Mayor,  Bradford  v.,  204,  206. 
Mayor,  Brady  v.,  70,  194,  201. 
Maj'or,  Brieswick  v,,  171. 
Mayor,  Brown  v.,  194. 
Mayor  v.  Comak,  177. 
Mayor  v.  Cunliffe,  190,  228. 
Mayor,  Davenport  v.,  204. 
Mayor,  Davis  v.,  199. 
Mayor  v.  Elliott,  95. 
Mayor,  Fish  v.,  201. 
Mayor  v.  Gill,  177. 
Mayor,  Halstead  v.,  175. 
Mayor  v.  Henry,  220. 
Mayor  v.  Herley,  163. 
Mayor,  Hovey  v.,  203. 
Mayor,  Humes  v.,  203,  204. 
Mayor,  Hutson  v.,  204. 
Mayor,  Kelly  v.,  98,  100. 
Mayor,  Kipp  v.,  176. 
Mayor,  Levy  v.,  213. 
Mayor,  Martin  v.,  215. 
Mayor,  Maximilian  v.,  219. 
Mayor,  McDonald  v.,  190,  194 
Mayor,  McSpeden  v.,  191. 
Mayor  v.  Moag.  170. 
Mayor,  Nichol  v.,  170. 
Mayor,  O'Meara  v.,  219. 
Mayor,  Paterson  v.,  185,  194 
Mayoi%  People  v.,  225. 
Mayor.  Presbyterian    Church  v., 

215. 
^ayor.  Radcliffe's  Ex'rs  v.,  208. 
Mayor,  Rae  v.,  188. 
Mavor  v.  Railroad  Co.,  215. 
Mayor  v.  Ray,  14  119,  230,  237. 
Mayor,  Reinhard  v.,  205. 
Mayor  v.  Reynolds,  190. 
Mayor,  Russell  v.,  220. 
Mayor,  Schanck  v.,  177.         '" 
Mayor,  Scott  v.,  220. 
Mayor  v.  Second  Ave.  R.  Co.,  182. 
Mayor,  Sharpiess  v.,  224. 
Mayor  v.  Sheffield.  200,  206. 
Mayor,  Smoot  v.,  220. 
Mayor,  State  v.,  176,  222. 


Mavor,  Stuyvesant  v.,  215. 
Mayor,  Tone  v.,  220. 
Mayor,  West  v.,  178. 
Mayor,  Whitney  v.,  178. 
Mayor,  Whyte  v.,  212. 
Mayor  v.  Winfield,  176. 
Maystield,  Stack  v.,  177. 
Mazet  v.  Pittsbur<?,  189. 
Mead,  Holmes  v.,  82. 
Mead  v.  Keeler,  100. 
Mead  v.  New  Haven,  223. 
Mead  v.  N.  Y.  etc.  R.  Co.,  143. 
Mechanics'  Association   v.  Lead 

Co.,  100. 
Mechanics'  Bank  v.  Bank  of  Col- 
orado, 161. 
Mechanics'  Bank  v.  Meriden  Co., 

121. 
Mechanics'  Bank  v.  N.  Y.  etc.  R. 

Co.,  109. 
Mechanics'  Ins.    Co.,    Barker  v., 

100. 
Medical  College  Case,  3. 
Medomak  Bank  v.  Curtis,  77. 
Meeker  v.  Winthrop  Ins.  Co.,  139. 
Meeks,  Kelly  v.,  170. 
Mehaffey,  San  Antonio  v.,  63,  68, 

227. 
McKellar  v.  Detroit,  205, 
Memphis  v.  Dean,  53. 
Memphis,  Hill  v.,  223,  230,  237. 
Memphis,  Tri.cally  v.,  171. 
Memphis  v.  Water  Co.,  216. 
Mempliis,  etc.  R.  Co.  v.  Dow,  96. 
Memphis,  etc.  R.  Co.,  People's  R. 

R.  v.,  215. 
Memphis  etc.  R.  Co.  v.  Railroad 

Commissioner,  141,  144, 
Menard  Co.,  West  v.,  90. 
Menser  v.  Risdon,  173. 
Mercantile  Bank,  Iowa  M.  Bank 

v.,  162. 
Mercer  v.  Pittsburg,  etc.  Co.,  183. 
Merchants'  Bank  v.  Bergen  Co., 

226,  229. 
Merchants'  Bank  v.  Central  Bank, 

77. 
Merchants'  Bank    v.    Randolph, 

161. 
Merchants'  Bank  v.  State  Bank, 

100,  162. 
Merchants'  Exchange,  Barry  v., 

27,  83,  84,  96,  100,  106,  124 


xlviii 


TABLE    OF   CASES   CITED. 


References  are  to  sections. 


Merchants'  Nat.  Bank  v.  Hanson, 

53. 
Meredith,  Cast-plate  Co.  v.,  203. 
Meredith,  Clearwater  v.,  144,  147, 

148. 
Meredith,  Eastman  v.,  219. 
Meredith,  Ferguson  v„  144. 
Meridan     Agency    Co.,    Mutual 

Association  v.,  122. 
Meriden  Co.,  Savings  Bank  v.,  121. 
Meri'ick  v.  Amherst,  225. 
Merrick  v.  Bank,  91. 
Merrick  v.  Reynolds  Eng.  Co.,  51, 

168. 
Merrick  v.  Van  Santford,  166. 
Merrill  v.  Monticello,  223, 224, 230. 
Merrill  v.  Plainfield,  198. 
Merrill  v.  Portland,  204. 
Merrimack,  etc.  R.  Co.,  Richards 

v.,  84,  100,  141. 
Merri weather.  Hardy  v.,  100. 
Mersey  Docks  v.  Gibbs,  220. 
Metcalf,  Beardstown,  etc.  Co.  v., 

84. 
Methodist  Episcopal  Church,  Bai- 
ley v.,  53. 
Methodist  Episcopal  Church,  Ma- 
son v.,  92. 
Metropolitan  Bank  v.  Godfrey,  85. 
Metropolitan,  etc.  Co.  v.  Abbey, 

•     189. 
Metropolitan,  etc.  Co.  v.  Byron, 

98. 
Metz,  Bridge  Co.  v.,  145. 
Metzker,  Petersburg!!  v.,  47,  170. 
Meyer  v.  Johnston,  142. 
Meyer  v.  Porter,  285. 
Miami  County,  Moran  v.,  227, 228. 
Michener  v.  Philadelphia,  207. 
Michigan,  etc.  R.  Co.,  Bissell  v.,  31, 

88,  55,  61. 
Michigan,  etc.  R.  Co.,  Swartout  v., 

168. 
Michigan,  etc.  R.  Co.,  Williston  v., 

124. 
Middleport  v.  ^tna  Ins.  Co.,  240. 
Middlesex  R.  Co.  v.  Boston,  etc. 

R.  Co.,  137. 
Middlesex  R.  Co.,  Feital  v.,  129. 
Middleton,  Ohio,  etc.  R.  Co.  v.,  77. 
Middleton,  Gas  Co.  v.,  199. 
Midland,  etc.  Ry.  Co.,  Edwards  v., 

163. 


Midland  R.  Co.  v.  Great  Western 
R.  Co.,  130. 

Migner,  Doyle  v..  3. 

Migret  v.  Supervisors,  238. 

Milan,  Kelley  v.,  223. 

Milbank  v.  N.  Y.  etc.  R.  Co.,  121. 

Milbourne,  Cowan  v.,  69. 

Milhan  v.  Sharp,  215. 

Mill  Co.,  Auerbach  v.,  100. 

Miller  v.  American  Ins.  Co.,  74 

Miller  v.  Ammon,  69. 

Miller,  Blazier  v.,  171. 

Miller  v.  Burch,  213. 

Miller  v.  Burlington,  etc.  R.  Co., 
163,  164. 

Miller,  Gottfried  v..  91. 

Miller,  Leavenworth  v.,  225. 

Miller  v.  Milwaukee,  188. 

Miller,  National  Trust  Co.  v.,  70, 
72,  78.  137. 

Miller  v.  Newberg  Coal  Co.,  168. 

Miller  v.  Norristown,  203. 

Miller  v.  St.  Paul,  205. 

Miller  &  Miss.  R.  Co.  v.  Lancas- 
ter, 144. 

Milliard  v.  St.  Francis,  etc.  Acad- 
emy, 100. 

Mills  v.  Brooklyn,  203,  208. 

Mills  V.  Gleason,  194. 

Mills  V.  Northern  R.  Co.,  53. 

Mills  County  v.  Burlington,  195. 

Milne  v.  Davidson,  172. 

Milnor  v.  N.  Y.  etc.  R.  Co..  167. 

Milwaukee,  Brodhead  v.,  225. 

Milwaukee,  Clason  v.,  176. 

Milwaukee,  Cook  v.,  205. 

Milwaukee,  Dart  v.,  203. 

Milwaukee,  Hasbrouck  v.,  235. 

Milwaukee,  Kelly  v.,  177. 

Milwaukee  Kneeland  v.,  189. 

Milwaukee,  Miller  v.,  188. 

Milwaukee,  Owens  v.,  203. 

Milwaukee,  Schultz  v.,  204. 

Milwaukee,  Tyson  v.,  203. 

^Milwaukee,  Yates  v.,  112. 

Milwaukee  Gas  Light  Co.,  State 
v.,  216. 

Miner  v.  N.  Y.  etc.  R.  Co.,  9. 

Miners'  Ditch  Co.  v.  Zellerbach, 
9,  33,  83,  87. 

Mining  Co.,  Mahoney  v.,  168. 

Minneapolis,  Alden  v.,  203. 

Minneapolis,  Henckes  v.,  215. 


TABLE   OF   CASES    CITED. 


xlix 


References  are  to  sections. 


Minneapolis,  etc.  R  Co.,  Snell  v., 

53. 
Jlinnesota,  etc.  R  Co.,  Freeman 

v.,  137. 
Minor  v.  Bank,  160. 
Minturn  v.  Larue,  170,  199. 
Mississippi,  etc.  R.  Co.  v.   Cam- 
den, 237. 
Mississippi,  etc.  R  Co.  v.  Lancas- 
ter, 144. 
Missouri,  etc.  R  Co.,  Gillette  v., 

164. 
Mitchell  V.  Rome,  203. 
Mitchell,  St.  Andrew's  Bay  Co.  v., 

52 
Mitford,  Day  v.,  204. 
Moag,  Mavor  v.,  170. 
Mobile  V.  Watson,  283. 
Mobile  V.  Yuelle,  212. 
Mobile  Bank,  Reed  v.,  1.35. 
Mobile,  etc.  R.  Co.,  Martin  v.,  166. 
Mobile,  etc.  R.  Co.  v.  Tallman,  96. 
Mobile,   etc.   R.  Co.,  Warren  v., 

146. 
Moffitt.  Chicago,  etc.  R  Co.  v., 

144,  146. 
Mohawk  Bridge  Co.  v.  Utica,  etc. 

Co.,  8,  216. 
Mokelumne,  etc.  Co.,  Magee  v.,  96, 

98,  100. 
Monmouth,  Parsons  v.,  194. 
Monmouthshire    Co.,   Maund   v., 

162. 
Monroe  Co.,  Wall  v.,  230. 
Monument  Nat.  Bank   v.  Globe 

Works,    9,   32,    74,    100,    104, 

162. 
Montague  v.  School  District,  100. 
Montauk  Gas  Co.,  Boyce  v.,  52. 
Montgomery,   Campbell   v..   202. 

220. 
Montgomery,  Capital  City  W.  W. 

Co.  v.,  217. 
Montgomery,  Davis  v.,  213,  219. 
Montgomery  v.  Montgomery,  etc., 

53. 
Montgomery,  State  v.,  235. 
Montgomery,  Studebaker  v.,  168. 
Montgomery  Co.  v.  Barber,  188. 
Montgomery  Co.,  House  v.,  204. 
Monticello,   Merrill  v.,  228,   224, 

230. 
Montpelier  v.  East  Montpelier,  92. 


]\Ioore,  Fitchburg  R.  Co.  v.,  163. 
Moore  v.  Hoffman,  178. 
Moore,  Mansfield  v.,  205. 
Moore  v.  New  York,  191,  193, 
Moore,  Rapho  v.,  206,  210. 
Moor's  Heirs  v.  Moor's  Devisees, 

81,  82. 
Moran  v.  Commissioners,  193. 
Moran  v.  IMiami  Co.,  227,  228. 
Morch  V.  Abel,  71. 
Morgan,  Staten  v.,  141. 
Morris,  Glasby  v.,  207. 
Morris  v.  Kiel,  87. 
Morris  v.  Lee,  157,  158. 
Morris  Canal  Co.  v.   Central  R. 

Co.,  8. 
Morris  Canal  Co.  v.  Fisher,  135. 
Morris,   etc.   R.   Co.    v.    Barclay 

Coal  Co..  131. 
Morris,  etc.  R.  Co.  v.  Sussex,  etc. 

R  Co..  8,  10,  130.  131. 
Morrison  v.  Gold  Mountain  Co., 

79. 
Morrison  v.  Inhabitants,  etc.,  174. 
Morrison  v.  Lawrence,  213,  222. 
Morrison,  McMahon  v.,  144 
Morrow  v.  Nashville,  115. 
Morse  v.  Brainerd,  129. 
Morse,  Smith  v.,  215. 
Moses  V.  Ocoee  Bank,  109. 
Moss  V.  Academy,  96. 
Moss  v.  Averill,  56, 100. 
Moss,  McCullough  v.,  78,  100. 
Moss  V.  Oakley,  100. 
Moss  V.  Rossie  L.  Min.  Co.,  77. 
Mott  V.  Hicks,  96,  100. 
Mott  V.  Ice  Co.,  163. 
Mott.  Shotwell  v.,  95. 
Moulton,  Wheelock  v.,  90. 
Moultrie  Co.  v.  Bank,  197. 
Moundeville,  Ohio  Iron  Works  v., 

Mounsey,   Australia,  etc.  Co.  v., 

96,  98. 
Mount  Heimon  School,  Niras  v., 

162. 
Mount  Pleasant  v.  Beckwith,  186, 

187. 
Mount  Sterling,  Curry  v.,  86. 
Mount     Washington,     etc.     Co., 

Downing  v.,  9.  47. 
Mount  Washington,  etc.  Co.,  In 

re,  86. 


TABLE   OF   CASES   CITED. 


References  are  to  sections. 


Mowrey  v.  Indiana,  etc.  R.  Co., 

144. 
Mueller.  Seeger  v.,  192. 
Mulford,  Camden  v.,  173,  174. 
Mullen,  Selma  v.,  170. 
Mulligan  v.  Railway  Co.,  129. 
]\Iumford  v.  Insurance  Co.,  100. 
Mundy,  Austin  v.,  175. 
Munn  V.  The  Commission,  96, 100. 
Munson  v.  Railroad  Co.,  79. 
Murdock,  McDonough  v..  93. 
Murphey  v.  Louisville,  201. 
Murphy  v.  Jacksonville,  175. 
Murphy  v.  Peoria,  202. 
Murphy.  Sullivan  v.,  100. 
Murphy's    Flushing    Co.,   Union 

Water  Co.  v..  64. 
Murray,  Ottawa  R.  Co.  v.,  77. 
Murray,  People  v.,  233. 
Musgrove,  Baltimore  v.,  190. 
Musser  v.  Johnson  v.,  87. 
Mutual,   etc.    Ass'n    v.    Meridan 

Agency  Co.,  122. 
Mutual  Life  Ins.  Co.  v.  McElway, 

109. 
McAlpine  v.  Union  Packing  Co., 

146. 
McAuley  v.  Columbus  R.  Co.,  143. 
McBride  v.  Grand  Rapids,  1«9. 
McCann,  State  v.,  225. 
McCartee  v.  Oi-phans'  Asylum,  81, 

82,  95. 
McCarthey,  Railway   Co.  v.,  62, 

63,  64,  68. 
McCaslin  v.  State,  190. 
McClintock,  Jolmson  Co.  v.,  235. 
McClure  v.  Oxford  Township,  229, 

235. 
McClurken,   Allegheny   City    v., 

70.  74. 
McCorabs  V.  Akron,  220. 
McConnell  v.  Hamm,  181. 
McConnell,  Jacksonville  v.,  47. 
McConvill  v.  Jersey  City,  175. 
McCoy  V.  Briant,  170. 
McCracken  v.  Sau  Francisco,  170, 

191,  194. 
McCray  v.   Junction  R  Co.,  53, 

147. 
McCreery,  People  v.,  181. 
McCuliough  V.  Moss.  78,  100. 
McCuUough  V.  Talldega  Ins.  Co., 

77,  168. 


McCune,  People  v.,  238. 

McCurdj'  v.  Rogers,  190. 

McDermott  v.  Board,  173. 

McDermott,  Evening  Journal  As- 
sociation v.,  162. 

McDonald,  Bank  v.,  168. 

McDonald,  Burr  v.,  88,  96. 

McDonald  v.  Mayor.  190,  194. 

McDonough  v.  Bank.  79. 

McDonougii  v.  Murdock,  93. 

McElwav,  Mutual  Life  Ins,  Co. 
v.,  109. 

McEvvin,  Heck  v.,  3. 

McGee,  Gooch  v.,  86. 

McGinnity  v.  New  York,  206. 

McGirr,  Richmond  v.,  177. 

McGiven,  Chicago  v.,  205. 

McGraw,  Chicago  v.,  222. 

McGregor  v.  Dover  &  D.  R.  Co., 
9,  55,  56,  70. 

McGregor  v.  Erie,  etc.  R.  Co.,  145, 
187. 

McGregor,  Harris  v.,  3. 

McGuire  v.  Rapid  City,  201. 

Mclnnis,  Champaign  v.,  205, 

Mclntire  v.  McLain  Ditch  Co.,  3. 

McKnight  v.  New  Orleans.  217. 

McLain  Ditch  Co.,  .^  clntire  v.,  3. 

McLaughlin,  Hamilloii  v.,  87. 

McLennan  v.  File  Works.  136. 

McMahon  v.  Morrison,  144. 

McMasters  v.  Reed,  47.  100. 

McMillan  v.  Railroad  Co.,  129, 137, 

McNab,  Eufaula  v.,  ks5,  224. 

McPherson  v.  Foster,  231,  232. 

McQuade,  Van  Dyke  v.,  156. 

McSpeden  v.  Mayor,  191. 

Nagle,  Wright  v.,  199. 

Nahant  Bank,  Atlas  Bank'v.,  74. 

Nancy,  City  of  Flora  v.,  205. 

Narragansett  Bank  v.  Silk  Co.,  100. 

Nash  V.  St.  Paul,  194. 

Nashua,  etc.  R.  Co.,  Smith  v.,  128. 

Nashua  Savings  Bank,  Greeley  v^, 

53. 
Nashville.  Morrow  v.,  115. 
Nason  v.  Boston,  205. 
Nason  v.  King  Mountain  M.  Co., 

87. 


TABLE    OF   CASES    CITED. 


li 


References  are  to  sections. 


Nassau  Co.,  Petersborough  R.  Co. 

v.,  50. 
National  Bank,  Gold  Min.  Co.  v., 

76. 
National  Bank  v.  Graham,  162. 
National  Bank  v.  Mathews,  53, 67. 
National  Bank  v.  Whitney,  53. 
National  Bank  v.  Young,  104. 
National,  etc.  Co.  v.  Clarkin,  81. 
National  Docks  v.  Railroad  Co., 

168. 
National  Exchange  Co.  v.  Drew, 

163. 
National  Ii-on  Co.  v.  Bowman.  101. 
National  Park  Bank  v.  German, 

etc.  Co.,  136, 
National  Trust  Co.  v.  Miller,  70, 

73,  78,  137. 
Naugatuck  R.  Co.  v.  Button  Co., 

53. 
Nauvoo  V.  Ritter,  237. 
Navigation  Co.,  Louisiana  Bank 

v.,  170. 
Nebraska,  Campbell  v.,  230. 
Nebraska  City  v.  Lampkin,  303. 
Nebraska  Dist.  Co.,  State  v.,  55. 
Needles,  Farmers'  Bank  v.,  101. 
Nelson,  East  Tenn.  etc.  R.  Co.  v., 

139. 
Nelson  v.  Eaton,  96. 
Nesbit  V.  Riverside  District,  338. 
Neuse  River,  Barrington  v.,  86. 
Nevada  Cent.  R.  Co.,  George  v., 

137. 
New  Albany  v.  Burke,  115. 
New  Albany,  Duckwall  v.,  175. 
New  Bedford,  Hafford  v.,  319. 
New  Bedford,  Haskell  v.,  308. 
New  Bedford,  Pierce  v.,  304. 
New  Bedford,  Wilson  v.,  311. 
New  Bedford,  etc.  R.  Co.  v.  Old 

Colony  R.  Co.,  146. 
New  Brunswick,  Parker  v.,  173. 
New  Brunswick  Ry.  Co.  v.  Cony- 

beare,  163. 
New  Decatur  v.  Berry,  314. 
New  Haven,  Barritt  v.,  303. 
New  Haven,  Boucher  v.,  305. 
New  Haven.  Cemetery  Associa- 
tion v..  183. 
New  Haven,  Heurson  v.,  313. 
New  Haven,  Hewison  v.,  304. 
New  Haven,  Jewett  v.,  319. 


New  Haven,  Jones  v.,  220. 
New  Haven,  Mead  v.,  223. 
New  Haven  E.  L.  Co.,  Edison,  etc. 

Co.  v.,  144. 
New  Jersey,  Williams  v.,  180. 
New  Jersey  Mfg.  Co.,  Leggett  v., 

8,  13. 
New  Jersey,  etc.  R.  Co.,  Brokaw 

v.,  162,  164. 
New  Jersey,  etc.  R.  Co.  v.  Strait, 

146. 
New    London   v.   Brainerd,    170, 

175. 
New  Orleans,  Bonner  v.,  135. 
New  Orleans,  Crescent  City  Ins. 

Co.  v.,  219. 
New  Orleans,  Fox  v.,  190. 
New  Orleans,  Inhabitants  v.,  177. 
New  Orleans,    Louisiana  v.,  204, 

333. 
New  Orleans,  McKnight  v.,   317. 
New  Orleans  v.  Phillipi,  313. 
New  Orleans,  Seibrecht  v.,  50, 188, 

190. 
New  Orleans  v.  Southern  Bank, 

194. 
New  Orleans,  United  States  v., 

179. 
New  Orleans  v.  Water  Co.,  180. 
New  Orleans  Bank,  Fortier  v.,  53. 
New  Orleans,  etc.  Co.  v.  Delamon, 

141. 
New  Orleans,  etc.  Co.  v.  Dunn, 

177. 
New    Orleans,    etc.    Co.   v.   Dry 

Docks  Co.,  133. 
New  Orleans  G.  L.  Co.,  Crescent 

City,  etc.  Co.  v.,  316. 
New  Orleans  G.  L.  Co.  v,  Louisi- 
ana L.  Co.,  216. 
New  Orleans,  etc.  R.  Co.  v.  Harnes, 

137. 
New  Orleans  Water  Co.  v.  Rivers, 

316. 
New  Orleans  Water  Works,  Con- 

ery  v.,  177. 
New  Orleans  Water  Works,  Tam- 

any  Water  Works  v.,  316. 
New  York,  Brady  v.,  189.  190. 
New  York,  Griffin  v.,  306. 
New  York,  Lynch  v.,  308,  211. 
New  York,  McGinnity  v.,  206. 
New  York,  Moore  v.,  191,  193. 


lii 


TABLE    OF   CASES   CITED. 


References  are  to  sections. 


New  York,  Peterson  v.,  77. 
New  York,  Reinhard  v.,  173. 
New  York,  Wiggins  v.,  177. 
New  York,  etc.  Canal  Co.  v.  Ful- 
ton Bank,  148. 
New  York  Inst.  v.  Howe,  95. 
New  York,  etc.  Ins.  Co.  v.  Ely,  13. 
New  York,  etc.  Ins.  Co.  v.  Sturges, 

23. 
New  York,  etc.  R.  Co.,  Boston, 

etc.  R.  Co.  v.,  137. 
New  York,  etc.  R.  Co.,  Bradlev 

v..  8. 
New  York,  etc.  R.  Co.,Buffet  v.,  1.3. 
New  York,  etc.  R.  Co.,  City  of 

Ohio  v.,  134. 
New  York,  etc.  R.  Co.,  Duncomb 

v.,  105. 
New  York,  etc.  R.  Co.,  Fisher  v., 

146. 
New  York,  etc.  R.  Co.,  Hood  v., 

13.  29,  53. 
New  York,  etc.  R.  Co.  v.  Ketchura, 

79. 
New  York,  etc.  R.  Co.  v.  Kip,  86. 
New  York,  etc.  R.  Co.,  Marsh  v., 

146. 
New  York,  etc.  R.  Co.,  Mead  v., 

143. 
New  York,  etc.  R.  Co.,  Mechanics' 

Bank  v.,  109. 
New  York,  etc.  R.  Co.,  Milbank 

v.,  121. 
New  York,  etc.  R.  Co.,  Milnor  v., 

167. 
New  York,  etc.  R.  Co.,  Minor  v.,  9. 
New  York,  etc.  R.  Co.  v.  Nickals, 

124. 
New  York,  etc.  R.  Co.  v.  Schuy- 
ler, 109. 
New  York,   etc.    R.    Co.   v.  Wi- 

nans,  9. 
New  South  Wales  Coal  Co.,  Payne 

v..  79. 
Newark,  State  v.,  81. 
Newark,  Stoudinger  v.,  207. 
Newburg,  Emerson  v.,  194. 
Newburg,  Smith  v.,  170,  194. 
Newburg  Coal  Co.,  Miller  v..  168. 
Newburg  Petroleum  Co.  v.  Weare, 

166. 
Newcastle  R.  Co.,  Charleston  v., 

143. 


Newcastle  R.  Co.,  Hamilton  v.,  96, 

100,  128. 
Newcastle  R.  Co.  v.  Simpson,  119. 
Newchester,  Bristol  v.,  186. 
Newell  V.  Smith,  129. 
Newmarket,  Gage  v.,  70. 
Newport  Bridge  Co.  v.  Foote,  203. 
Newport  Co.,  Widrig  v.,  158. 
Newport  Mfg.    Co.,    Commercial 

Bank  v.,  96,  100. 
Niagara  County  Bank  v.  Baker, 

103. 
Niautic  Savings  Bank  v.   Doug- 
las, 146. 
Nichol  V.  Insurance  Co.,  160. 
Nichol  V.  Mayor,  170. 
Nichols,  Ernest  v.,  120. 
Nickals,    N.   Y.    etc.    R.   Co.,   v. 

124. 
Nickerson  v.  Hydraulic  Co.,  219. 
Niles,  Bank  of  Michigan   v.,  81, 

857. 
Niles  Water  Works  v,  Niles,  189, 

196. 
Nims  V.  Mount  Hermon  School, 

163. 
Nisbet,  Hill  v.,  131. 
Nist,  Canton  v.  173. 
Noble,  Fay  v.,  96,  100. 
Norfolk  R.  Co.,  Hussey  v.,  163. 
Norfolk  R.  Co.,  Norwich  v.,  53,  55, 

56.  70. 
Norfolk  R.  Co.  v.  Shaw,  141. 
Normand  v.  Otoe  Co.,  198. 
Norristown,  Miller  v.,  203. 
Norristown  v.  Thayer,  204.  210. 
North,  Silver  Lake  Bank  v.,  166, 

167. 
North  American   Coal   Co.,  Tal- 

mage  v.,  47,  52. 
North   American    Min.   Co.,   Ar- 

desco  Oil  Co.  v..  83,  91. 
North  Carolina  Gold  Co.,  Coit  v., 

108,  115. 
North    Hempsted  v.   Herapsted, 

187. 
North  Hudson  Co.  v.  Hoboken, 

183. 
North  River,  etc.  Co.,  People  v., 

137,  148. 
North  River,  etc.  Co.,  Wj^lde  v., 

129. 
North  Side  Ry.  v.  Worthington,  7. 


TABLE   OF   CASES    CITED. 


liii 


References  are  to  sections. 


North  Stafford  Ry.,  Earl,  etc.  v., 

70,  79. 
North  Yarmouth  v.  Skillings,  186. 
Northern  Bank  v.  Johnson,  161. 
Northern  Bank  v.  Porter,  226, 
Northern  Bank  v.  Trustees,  228. 
Northern  Cent.   R.  Co.  v.  Drew, 

146. 
Northern  Coal  M.  Co.,  In  re,  120. 
Northern  Liberties,  Carr  v.,  202, 

203. 
Northern  Liberties,  Pray  v.,  224. 
Northern  Bio.  R.  Co.,  Powell  v., 

146. 
Northern  T.  Co.  v.  Chicago,  81. 
Northwestern    Cement   Co.,   Ba- 

telle  v.,  79. 
Northwestern  Pack.  Co.  v.  Shaw, 

53,  74. 
Northwestern    Ry.,   Shrewsbury 

Ry.  v.,  55,  70,  128,  137. 
Norton  v.  Bank,  74. 
Norton  v.  City  of  Nevada,  233. 
Norton,  Commercial  Bank  v.,  160. 
Norton  v.  Dyersburg,  223,  230. 
Norwich  v.  Norfolk  R.  Co.,  52,  55, 

56,  70. 
Norwich  Gas  Co.  v.  City  Gas  Co., 

216,  218. 
Norwich  Transp.  Co.,  Converse  v., 

53. 
Noyes  v.  Mason  City,  203. 
Noyes  v.  Railroad  Co.,  129. 
Nugent  V.  Supervisors,  143. 146. 
Nunnemacher,  Ohio  Ins.  Co.  v.,  9. 
Nutt  V.  Danville  Seminary,  7, 
Nutting  V.  Railroad  Co.,  129. 

o. 

Oakland  v.  Carpentier,  215. 
Oakland  Bank  v.  Wilcox,  159. 
Oakley,  Moss  v.,  100. 
Oakwood,  Hyde  Park  v.,  183. 
Oberlin,  Bronson  v.,  175. 
O'Brien,  Little  v.,  74,  75. 
O'Brien  v.  St.  Paul,  211. 
Occum  Co.  V.  Sprague  Mfg.  Co., 

9,  137. 
Ocean  Dry  Dock  Co.,  New  Orleans 

Co.  v.,  122. 
Ocoee  Bank,  Moses  v.,  109. 


O'Connor  v.  Pittsburg,  203. 
Oconto,  Lord  v.,  170,  173. 
O'Donnell,  Alexander  v.,  69. 
Og  V.  Lansing,  219. 
Ogden  V.  Daviess  County,  220. 
Ogdensburg,  Urqnhart  v.,  202. 
Ogdensburg,  etc.  R,  Co.  v.  Ver- 
mont, etc.  R.  Co.,  9. 
Ogilvie  V.  Knox  Ins.  Co.,  108. 
Ogle,  Roberts  v.,  212. 
Ohio,  Shields  v.,  143,  144. 
Ohio  Candle  Co.,  Emery  v.,   148. 
Ohio  Iron  Works  v.  Moundeville, 

225. 
Ohio,    etc.    Ins.    Co.    v.   Nunne- 
macher, 9. 
Ohio,  etc.  Ins.  Co.  v.  Trust  Co.,  74. 
Ohio,  etc.  R.  Co.,  Dimpfell  v.,  78. 
Ohio,  etc.  R.  Co.  v.  Ind.  etc.  R.  Co., 

137. 
Ohio,  etc.  R.  Co.  v.  Middleton,  77. 
Ohio.  etc.  R.  Co.  v.  Wheeler,  145. 
Oil  Co.,  Buffalo  Oil  Co.  v.,  162. 
Oil  Co.  V.  Railway  Co.,  81. 
Oil  Creek  R.  Co.,  Kersey  Oil  Co. 

v.,  139. 
Oil  Creek  R.  Co.,  Root  v.,  146. 
Olcott.  Sutherland  v.,  109.  113. 
Olcott  V.  Tioga  R.  Co.,  100. 
Old  Colony  R.  Co.,  Davis  v.,  9,  36, 

47,  53. 
Old  Colony  R.  Co.,  New  Bedford, 

etc.  Co..  146. 
Oliver  v.  Krightly,  198. 
Olney  v.  Chadsey,  159. 
Omaha,  Hurford  v.,  170. 
Omaha  R.  Co.,  Clark  v.,  137. 
Omaha  Smelting  Co.,  Abbott  v.,  3. 
O'Meara  v.  Mayor,  219. 
Oneida  Bank  v.  Ontario  Bank,  74, 

119. 
Onstott  v.  People,  238. 
Ontario  Bank,  Barnes  v.,  96,  98, 

160,  161. 
Ontario  Bank,  Oneida  Bank  v.,  74, 

119. 
Ontario,  etc.  R.  Co.,  Rome,  etc.  R. 

Co.  v.,  146. 
Ooregum  G.  Min.  Co.  v.  Roper,  117. 
Opinions  of  Judges,  181. 
Oregon   Ry.  v.  Oregonian  Ry.,  3, 

8,  9,  10,  12,  53,  69,  72,  78,  137, 

138. 


liv 


TABLE    OF   CASES    CITED. 


References  are  to  sections. 


Orleans  v.  Pratt,  238. 
Orleans  Navigation  Co.,  Louisi- 
ana State  Bank  v.,  47. 
Orphans'  Asylum,   McCartee  v., 

81,  82,  95. 
Orr  V.  Lacey,  70. 
Orton,  Southern  Pac.  Co.  v.,  81. 
Osawkie  Township,  State  v.,  225. 
Osborne,  Toll  Bridge  Co.  v.,  9. 
Osborne  v.  Tunis,  90. 
Osgood  V.  Layten,  108. 
Oshkosh,  Hayes  v.,  219. 
Ossepee  Mfg.  Co.  v.  Canney,  74,  75, 

81. 
Oswego,  Marcy  v.,  53. 
Otoe  County,  Deyo  v.,  237. 
Otoe  Count}',  Normand  v.,  198. 
Ottawa  V.  Carey,  170,  225. 
Ottawa,  Derinzv  v.,  203. 
Ottawa,  Hackett  v.,  227,  229. 
Ottawa,  Mather  v.,  170,  225. 
Ottawa  R.  Co.  v.  Murray,  77. 
Ouachita  Co.  v.  Wolcott,  230. 
Overend  &  Gurney  Co.  v.  Gibbs, 

154,  156. 
Overseers  v.  Overseers,  186. 
Owen  County,  Browning  v.,  222. 
Owens,  Bank  of  U.  S.  v.,  69. 
Owens  V.  Milwaukee,  203. 
Oxford  Ins.  Co.  v.  Spradley,  96, 

100. 
Oxford,   etc.   R.   Co.,   Rogers   v., 

53. 
Oxford  Township,    McClure    v., 

229,  235. 

P. 

Pacific  Nat.  Bank,  Eaton  v.,  127. 
Pacific  Postal  Tel.  Co.  v.  Western 

Union,  etc.,  53. 
Pacific  R.  Co.  V.  Seeley,  85. 
Packer  v.  Railway  Co.,  8,  9. 
Packet  Co.,  Abbott  v.,  70. 
Paddock,  Aui-ora  Ag'l  Soc.  v.,  77, 

84. 
Page  V.  Allen,  198. 
Page,  Bryan  v.,  191,  194. 
Page  V.  Heinberg,  81. 
Page  v.  St.  Louis,  177. 
Paine  v.  Lake  Erie,  etc.  Co.,  144, 

146. 


Paine  v.  Spratley,  170. 

Palmer,  Durant  v.,  206. 

Palmer,  Leavitt  v.,  74. 

Palmer,  Pritts  v.,  81. 

Palmer,  Railroad  Co.  v.,  144 

Pangborn  v.  Westlake,  69. 

Paquet,  Hedges  v.,  156. 

Paret  v.  Bayonne,  195. 

Paris.  Hall  v.,  53,  74. 

Paris  Rink  Co.,  Spiller  v.,  79. 

Parisli,  Cumberland,  etc.  Co.  v., 

153. 
Parish  v.  Wheeler,  129. 
Parker  v.  Bernal,  122. 
Parker  v.  Donnally,  159. 
Parker,  Ind.  Car  Co.  v.,  210. 
Parker  v.  New  Brunswick,  173. 
Parker,  Wetmore  v.,  93. 
Parker,  Williams  v.,  116. 
Parkersburg  v.   Brown,  74,  181, 

224. 
Parkersburg  Gas  Co.  v.  Parkers- 
burg, etc.  Co.,  170,  199,  316. 
Parks,  People  v.,  181. 
Parnably,  Canal  Co.  v.,  220. 
Parr  v.  Green  bush,  190. 
Parsons  v.  Monmouth,  194. 
Partridge  v.  Badger.  83,  96, 100. 
Passaic,  State  v.,  170. 
Patapsco  Guano  Co.,  Peebles  v., 

163. 
Patchett,  Gregory  v.,  70. 
Patchin  Bank,  Bank  of  Gennes- 

see  v.,  9. 
Paterson,  Bank  of  Columbia  v., 

76,  77,  188. 
Paterson,  Boom  Co.  v.,  86,  183. 
Paterson  v.  Bowers,  198. 
Paterson,  King  v.,  124,  126. 
Paterson,  Kip  v.,  176. 
Paterson  v.  Mayor,  185,  194 
Paterson,  Rye  v.,  213. 
Paterson.  State  v.,  173.  235. 
Patrons'  Merc.  Ass'n,  Humphrey 

v.,  77,  168. 
Paul,  Corser  v.,  161. 
Paul  V.  Kenosha,  74,  191. 
Payne  v.  N.  S.  W.  Coal  Co.,  79. 
Payson  v.  Stoever,  110. 
Payson,  TurnbuU  v.,  137. 
Peacock,  Talldega  Ins.  Co.  v.,  100. 
Pearce  v.  Madison,  etc.  R.  Co.,  9, 

30,  52,  53,  70,  143, 148. 


TABLE    OF    CASES    CITED. 


Ir 


References  are  to  sections. 


Pearson  v.  Concord,  etc.  R.  Co., 

132. 
Peaslee.  Trustees  v.,  15,  98. 
Peay,  Whitney  v.,  74. 
Peck,  Carter  v.,  129. 
Peck  V.  Chicago,  etc.  R.  Co.,  145. 
Peck  V.  Lock  wood,  212. 
Pedrick  v.  Bailey,  176. 
Peebles  v.  Patapsco  Guano  Co., 

162. 
Peet  V.  Railway  Co.,  129. 
Pell,  Talmage  v.,  121. 
Pelton,  Coggeshell  v.,  95. 
Pendleton  v.  Amy,  227. 
Pendleton,  Durango  v.,  201. 
Peninsular  Bank  v.  Hanmer,  77. 
Peninsular  S.  Co.,  Bennett  v.,  129. 
Penn  v.  Bornman,  69. 
Pennington,   Town   of  Durango 

v.,  189. 
Pennock  v.  Coe,  8. 
Pennsylvania  v.  Erie  R.  Co.,  124. 
Pennsylvania  Coal  Co.,  Del.  Canal 

Co.  v.,  77. 
Pennsylvania  Match  Co.  v.  Hap- 
good,  79. 
Pennsylvania    R.    Co.    v.   Canal 

Commissioners,  8, 12. 
Pennsylvania  R.  Co.  v.  St.  Louis, 

etc.  R.  Co.,  9,  53,  72,  74,  136, 

187,  188. 
Pennsylvania  R.   Co.,  Central  R. 

Co.  v.,  121. 
Pennsylvania  R.  Co.  v.  Perry,  129. 
Penobscot  Boom  Co.  v.  Lamson,  3. 
Pensacola,  Broughton  v.,  233. 
Pensacola    Tel.    Co.    v.   Western 

Union  Co.,  166. 
People  V.  Albany,  212. 
People  v.  Bank,  170. 
People  v.  Brighton,  86. 
People  V.  Chicago  Gas  Trust  Co., 

55,  121,  122,  137,  148. 
People  v.  Chicago,  etc.  R.  Co.,  129. 
People  V.  Commissioners,  189. 
People  V.  Coon.  195. 
People  V.  County,  230. 
People,  Darst  v.,  212. 
People,  Dingley  v.,  21.5. 
People,  English  v.,  181. 
People,  Flagg  v.,  201. 
People,  Greeley  v.,  185. 
People  V.  Harris,  185. 


People,  Hensley  v.,  225. 

People,  Horn  v.,  171. 

People,  Law  v.,  196,  197,  231. 

People  V.  May,  190. 

People  V.  Mayor,  225. 

People  V.  McCreerv,  181. 

People  V.  McCune,"  238. 

People  V.  Murray.  233. 

People  V.  Onstott,  238. 

People  V.  Parks,  181. 

People  V.  Ragg,  225. 

People  V.  San  Francisco,  195,  201. 

People  V.  Selfridge,  3. 

People  V.  Smith,  183. 

People  V.  Special  Sessions,  171. 

People,  St.  Louis  Bridge  Co.  v., 

207. 
People  V.  Sugar  Refining  Co.,  137, 

148. 
People  V.  Swift,  194. 
People  V.  Troop,  176. 
People  V.  Trustees,  186. 
People,  Turnpike  Co.  v.,  9. 
People  V.  Utica  Ins.  Co.,  9,  12,  22. 
People  V.  Weber,  170. 
People's   Association,  Hagie    v., 

120. 
People's  Railroad  v.  Memphis,  etc. 

R.  R.  Co.,  215. 
Peoria,  Murphy  v.,  202. 
Peoria,  etc.  R.  Co.  v.  Coal  Valley 

Co.,  9. 
Peoria,  etc.  R.  Co.  v.  Thompson, 

131. 
Perin  v.  Carey,  93,  185. 
Perkins,  City  Bank  v.,  161. 
Perkins  v.  Railroad  Co.,  129. 
Perkins,  South  Ottawa  v.,  224. 
Perkinson  v.  St.  Louis,  190. 
Perley  v.  Georgetown,  222. 
Perrine  v.  Ches.  &  Del.  Ry.,  8,  12, 

28,  81. 
Perry,  Penn.  R.  Co.  v.,  129. 
Perry  v.  Waterproof  Co.,  77. 
Perry's  Case,  158. 
Peru.  Wilkinson  v.,  235. 
Peters  v.  Lincoln,  etc.  R.  Co.,  137. 
Peters  v.  Lynchburg,  170. 
Petersborough  R.  Co.  v.  Nassau 

Co.,  50. 
Petersburg  v.  Metzker,  47,  170. 
Peterson,  Clapp  v.,  120. 
Peterson  v.  New  York,  77. 


Ivi 


TABLE    OF   CASES   CITED. 


References  are  to  sections. 


Phelps  V.  Farmers'  Bank,  124. 
Phelps,  Kennedy  v.,  213. 
Phelps  V.  Mankato,  200. 
Philadelphia,  Bryson  v.,  215. 
Philadelphia,  Elliott  v.,  219. 
Philadelphia,  Hague  v.,  194. 
Philadelphia,  Hammett  v.,  225. 
Philadelphia,  Johnson  v.,  215. 
Philadelphia,  Michener  v.,  207. 
Philadelphia,  Reilly  v.,  194. 
Philadelphia  v.  Ridge   Ave.  etc. 

Co.,  14G. 
Philadelphia,   Savings    Fund   v., 

215. 
Philadelphia,  Sharpless  v.,  181. 
Philadelphia,  Sower  v.,  171. 
Philadelphia,  etc.  R.  Co.  v.  Mary- 
land, 146,  148. 
Philadelphia,  etc.  R.  Co.  v.  Quig- 

ley,  162. 
Philadelphia,  etc.  R.  Co.,  Taylor 

v.,  98. 
Phillipi,  New  Orleans  v.,  213.         i 
Phillips  V.  Allen,  212. 
Phillips,  Clinton  v.,  176. 
Phillips,  Drake  v.,  198. 
Phillips  v.  Railroad  Co.,  129. 
Phillips  Academy  v.  King,  92. 
Phoenix  Co.,  In  re,  74. 
Phoenix  Glass  Co.,  Beers  v.,  96. 
Picard  v.  Pullman  Car  Co.,  9. 
Pickering  v.  Stephenson,  53,  154. 
Piedmont  Co.,  Curtis  v.,  74 
Pierce  v.  Crampton,  167. 
Pierce  v.  Emerj-,  88,  91,  100. 
Pierce  v.  New  Bedford,  204. 
Pieri  v.  Shieldsboro,  212. 
Pierson,  First  Nat.  Bank  v.,  103. 
Pike  Co.,  Foote  v.,  227. 
Pilgrim  Society,  Haywood  v.,  77. 
Pilkin,  Belding  v.,  69. 
Pimental  v.  San  Francisco,  191. 
Pine  Grove  Township  v.  Talcott, 

238. 
Pipes,  St.  Louis,  etc.  R.  Co.  v.,  129. 
Pinto  Co.  Case,  137. 
Pitney,  Lucas  v.,  96,  100. 
Pittsburg,  Commonwealth  v.,  100. 
Pittsburg  v.  Green,  220. 
Pittsburg,  Mazet  v.,  189. 
Pittsburg,  O'Connor  v.,  203. 
Pittsburg,    etc.   Co.,    Mercer    v., 

183. 


Pittsburg,  etc.  R.  Co.  v.  Keokuk,. 

etc.  Co.,  9,  47,  52,  53,  54,  69,74, 

76. 
Pittsburg,  etc.  R.  Co.,Shawmut's 

Bank  v..  129. 
Pittsford,  Taft  v.,  9,  70,  201. 
Pitzman  v.  Free  berg,  237. 
Placerville,  Douglas  v.,  198. 
Plainfield,  Merrill  v.,  198. 
Plank  Road  Co.,  City  Council  v., 

9,70. 
Plank      Road     Co.,     Jackson's 

Adm'rs  v.,  124. 
Planters'  Bank  v.  Sharp,  77. 
Planters'  Bank  v.  Whittle,  91. 
Planters'  Press,  Greenville  Com- 
press v.,  72,  74,  143. 
Piatt,   Central    G.    Min.   Co.    v., 

83. 
Piatt  V.  Union  Pac.  R.  Co.,  105. 
Plattsburg,  etc.  R.  Co.,  Hoyle  v., 

153. 
Plattsmouth,  Read  v.,  224 
Plume  Co.,  Union  Hardware  Co. 

v.,  74 
Plymouth  B.  Co.  v.  Berry,  76. 
Poitiaux,  The  Banks  v.,  81,  83. 
Police  Jury  v.  Britton,  100,  223, 

237. 
Pollard  v.  Maddox,  141. 
Pollock  v.  Louisville,  219. 
Pomeroy  v.  Bank,  144. 
Pontiac  v.  Carter,  203. 
Poole,  Bard  v.,  166,  167. 
Poole  v.  West  Point,  etc.  Ass'n, 

110. 
Poor.   European,   etc.    R.  Co.  v., 

153. 
Pope  V.  Capitol  Bank,  103. 
Port  Huron,  Ashley  v.,  211. 
Port  Huron,  Thomas  v.,  74. 
Portage,  James  v..  200. 
Porter,  Meyer  v.,  235. 
Porter,  Northern  Bank  v.,  226. 
Portland,  Coulson  v.,  231. 
Portland,  Franklin  Wharf  Co.  v., 

208,  213. 
Portland,  Merrill  v.,  204 
Portland  v.  Richardson,  206. 
Portland  L.  &  M.  Co.  v.  East  Port- 
land, 201. 
Portland,  etc.  R.  Co.  v.  Hartford^ 

235. 


TABLE   OF   CASES    CITED. 


Ivii 


References  are  to  sections. 


Post,  County  of  Randolph  v.,  237. 
Post,  Kendall  Co.  v..  190. 
Potter  V.  Bank,  100. 
Potter,  Chaffee  Co.  v.,  53. 
Potter  V.  Commissioners,  228. 
Poughkeepsie,  Dickinson  v.,  191. 
Powder  River,  etc.  Co.  v.  Lamb, 

74,  75. 
Powell.  Columbus,  etc.  R.  Qo.  v., 

146. 
Powell  V.  Northern  Mo.  R.  Co., 

146. 
Powers  V.  Council  Bluffs,  220. 
Powers,  Hodgson  v.,  53. 
Poyer  v.  Des  Plaines,  178. 
Pratt,  Bott  v.,  173. 
Pratt,  Orleans  v.,  228. 
Pratt  V.  Pratt.  53. 
Pratt  V.  Railroad  Co.,  129. 
Pratt  V.  Short,  74. 
Pratt  V.  Topeka  Bank,  161. 
Presbyterian  Church   v.  Mayor, 

etc.,  215. 
Prescott,  Buckley  v.,  205. 
Preston,  Gordon  v.,  84. 
Preston  v.  Railroad  Co.,  77. 
Price  V.  Quincy,  196. 
Price  V.  St.  Louis  Ins.  Co.,  137. 
Priest  V.  Hat  Co.,  168. 
Pritts  V.  Palmer,  81. 
Proctor,  Rutland,  etc.  R.  Co.  v., 

129. 
Proprietors,  etc.  v.  Gordon,  77. 
Proprietors,  etc.,  Lowell  v.,  213. 
Proprietors,  etc.,  Royce  v.,  81. 
Proprietors,  etc.,  Woodbridge  v., 

77. 
Prout  V.  Inhabitants,  etc.,  195. 
Providence,  Simmons  v.,  203. 
Providence  Bank  v.  Bellings,  8. 
Providence  Ins.  Co.,  Head  v.,  21, 

28,  37,  47,  50,  70,  170. 
Pullman  v.  Upton,  112. 
Pullman  Co.,  Heinrich  v.,  163. 
Pullman  Car  Co.,  Central  Trans. 

Co.   v.,  9,   10,   12,   37,   52,  53, 

54,  55,  68,  70,  72,  74,  78,  137, 

138. 
Pullman  Southern  Car  Co.,  Pick- 

ard  v.,  9. 
Purdue  University,  Marks  v.,  225. 
Putnam,  Smith  v.,  155. 
Pyle  Works,  In  re,  125. 


Q. 


Quebrada  Ry.,  In  re,  114. 
Quicksilver  Min.  Co.,  Kent  v.,  96. 

_  106,  124,  127. 
Quigley,  Dayton  v.,  176. 
Quigley,  Philadelphia,  etc.  R.  Co. 

v.,  163,  333. 
Quin  V.  City  of  Baltimore,  201. 
Quincy  v.  Jones,  203. 
Quincy,  Price  v.,  196. 
Quincy    Bridge    Co.    v.    Adams 

County,  145. 

E. 

Rabb,  Trenton,  etc.  Co.  v.,  203. 
Rade  v.  Dunlap,  137. 
Racine,  Teegarden  v.,  177. 
Racine  R.  Co.  v.  Farmers'  L.  &T. 

Co.,  144,  145. 
Radcliff's  Ex'rs  v.  Mayor,  208. 
Radecke,  Baltimore  v.,  176,  178, 

212. 
Rae  V.  Mayor,  188. 
Ragg,  People  v.,  225. 
Railroad  Association,   Crawford 

v.,  129. 
Railroad    Commissioners,    Rail- 
road Co.  v.,  144. 
Railroad  Co.,  Allison  v.,  235. 
Railroad  Co.  v.  Berry,  144. 
Railroad  Co.,  Bound  v.,  235. 
Railroad  Co.,  Brainerd  v.,  135. 
Railroad  Co.,  Bridgeport  v.,  170, 

177,  201. 
Railroad  Co.,  Brintnall  v.,  129. 
Raih'oad  Co.,  Burroughs  v.,  139. 
Railroad  Co.,  Darling  v.,  129. 
Railroad  Co.,  Davis  v.,  136,  137. 
Railroad  Co.,  Fogg  v.,  163. 
Railroad  Co.  v.  Georgia,  141,  143, 

144. 
Railroad  Co.,  Gifford  v.,  198. 
Railroad  Co.,  Hill  Mfg.  Co.  v.,  139. 
Railroad  Co.,  Hood  v.,  139,  164. 
Railroad  Co.  v.  Howard,  9. 
Railroad  Co.,  Ind.  Roll  M.  Co.  v., 

159. 
Railroad  Co.,  Irish  v.,  139. 
Railroad  Co.,  Krulevitz  v.,  163. 
Railroad  Co.,  Kyle  v.,  139. 


iviii 


TABLE    OF   CASES    CITED. 


References  are  to  sections. 


Railroad  Co.,  Lock  Co.  v..  129. 
Railroad  Co.  v.  Lockwood,  9. 
Railroad   Co.    v.   Manufacturing 

Co.,  129. 
Railroad  Co.  v.  Mayor,  215. 
Railroad  Co.,  McMillan  v.,  129. 137. 
Railroad  Co.,  Mohawk  Bridge  Co. 

v.,  216. 
Railroad  Co.,  Mulligan  v.,  129. 
Railroad  Co.,  Munson  v.,  79. 
Railroad  Co.,  National  Docks  v., 

168. 
Railroad  Co.,  Noyes  v.,  129. 
Railroad  Co.,  Nutting  v.,  129, 
Railroad  Co.,  Oil  Co.  v.,  81. 
Railroad  Co.  v.  Palmes,  144, 
Railroad  Co.,  Peet  v.,  129. 
Railroad  Co.,  Perkins  v.,  129. 
Railroad  Co.,  Phillips  v.,  129. 
Railroad  Co.,  Pratt  v.,  129. 
Railroad  Co.,  Preston  v.,  177. 
Railroad  Co.  v.  Quigley,  222, 
Railroad  Co.  v.  Railway  Co.,  199. 
Railroad  Co.,  Ranger  v.,  162. 
Railroad  Co.,  Richards  v..  84,  100, 
Railroad  Co,,  Ryan  v.,  156, 
Railroad  Co.,  Salem  v.,  212. 
Railroad  Co.,  State  v.,  144. 
Railroad  Co.,  State  Board  v.,  191. 
Railroad  Co.,  Stevens  v.,  198. 
Railroad  Co.,  Tench  v.,  162. 
Railroad  Co.,  Thomas  v.,  35, 47,  52, 

53,  55,  69,  70,  71,  72.  78,   119, 

128,  137. 
Railroad  Co.,  Titus  v.,  159. 
Railroad  Co.,  Transportation  Co. 

v.,  129. 
Railroad  Co.,  Tucker  Canal  Co.  v., 

216. 
Railroad  Co.  v.  Union  R.  Co.,  64. 
Railroad  Co.  v.  Vance,  9. 
Railroad  Co.,  Walker  v.,  162. 
Railroad  Co.,  West  Guillimbury 

v.,  198. 
Railroad  Co.,  Whitfield  v.,  162. 
Railroad  Co.,  Whitney  v,,  224. 
Railroad  Co.,  Woodward   v.,  129, 
Railroad  Co.,  Wright  v.,  172. 
Railway  Co.  v.  Allerton,  109,  110. 
Railway  Co.,  Coleman  v,,  136. 
Railway  Co.,  Commissioners  v.,  96. 
Railway  Co.,  Great  Northern  R. 

Co.  v.,  137. 


Railway  Co.  v.  McCarthey,  63,  64, 

68, 
Railway  Co.,  Railroad  Co.  v.,  199. 
Railway  Co.  v.  Redmond,  7. 
Raleigh,  Tucker  v.,  96. 
Ramsay  County,  Goodwin  v.,  230. 
Ramsey  v.  Insurance  Co.,  168, 
Randall,  Toppenden  v.,  69. 
Randall  v.  Van  Vechten,  77,  158. 
Randolph,  Bigelow  v.,  219. 
Randolph  v.  Larned,  141. 
Randolph  County  v.  Post,  227. 
Ranger  v.  Railroad  Co,,  162, 
Rapho  V,  Moore,  206,  210. 
Rapid  City,  McGuire  v.,  201. 
Rattle,  Burt  v.,  84. 
Ray  V.  Ind.  Ins.  Co.,  101, 
Ray  V.  Manchester,  204. 
Ray,  Mayor  v.,  74,  119,  230,  237. 
Read  v.  iPlattsmouth,  225. 
Redd  V  Henry  County,  235. 
Reddish,  Cottage  Co. "v.,  100. 
Refdmond,  Railway  Co,  v.,  7. 
Redmond,  South  Wales  R.  Co.  v., 

128.  130. 
Reed,  Bank  of  Pennsylvania  v,, 

161. 
Reed,  Emniett  v,,  77. 
Reed  v,  Hoyt,  91, 
Reed,  Laing  v.,  98. 
Reed,  McMasters  v.,  47,  100, 
Reed  v.  Mobile  Bank,  135. 
Reed  v.  Richmond,  3. 
Reed  v.  Savings  Bank,  162. 
Reese  v.  Bank,  124. 
Reeves  v.  Wood  Co.,  86, 
Regents  Canal  Co.,  Ware  v.,  53. 
Reichwold  v.  Commercial  Hotel, 

83,  91. 
Reilly  v.  Philadelphia,  194. 
Re  International  Ins.  Co.,  96. 
Reinhard  v.  Mayor,  204. 
Reinhard  v.  New  York,  172. 
Relfe,  Alexander  v,,  163. 
Rensselaer  &   Saratoga  R.  Co.  v. 

Davis,  8, 
Republic  Ins.  Co.  v.  Swigert,  120. 
Requa  v.  Rochester,  204,  206,  220. 
Rex  V.  Amery,  3. 
Reynolds  v.  Commissioners,  83. 
Reynolds,  Mayor,  etc.  v.,  190. 
Reynolds  v.  Shreveport,  203. 
Reynolds  v.  Stark  Co.,  81. 


TABLE    or    CASES    CITED. 


lix 


References  are  to  sections. 


Reynolds  Eng.  Co.,  Merrick  v.,  51, 
168. 

Rhodes  v.  Cleveland,  311. 

Rice,  Exchange  Bank  v.,  219. 

Rich  V.  Erral,  74,  75. 

Rich  V.  Southern  Pac.  Co.  135. 

Rich  V.  State  Nat.  Bank,  77. 

Richards  v.  Clarksburg,  170. 

Richards  v.  Merrimack  R.  Co.,  84, 
100,  141. 

Richards  v.  Supervisors  of  Lyon 
Co.,  196. 

Richards  v.  Warren  Co.,  190. 

Ricliardson  v.  Buhl,  148. 

Richardson,  Portland  v.,  206. 

Richardson  v.  Sibley,  9,  58,  137. 

Richardson  Co.  v.  Grant,  191. 

Riche,  Ashbury  R.  Co.  v.,  9,  41,  42, 
43,  44,  45,  53,  53,  73,  78,  137. 

Richmond,  Jones  v.,  188. 

Richmond  v.  McGirr,  177. 

Richmond,  Reed  v.,  3. 

Richmond,  Thomas  v.,  73, 138, 172, 
190. 

Richmond,  Wade  v.,  198. 

Richmond  Factory  Co.  v.  Alex- 
ander, 3. 

Richmond,  etc.  Co.,  Gordon's 
Ex'rs  v.,  119. 

Richmond,  etc.  R.  Co.  v.  Louisi- 
ana, etc.  R.  Co.,  8. 

Richmond,  etc.  R.  Co.  v.  Snead, 
100. 

Ridge  Avenue,  etc.  R.  Co.  v.  Phil- 
adelphia, 146. 

Ridgway  v.  Bank.  96,  100. 

Ridley  v.  Plymouth  Baking  Co., 
77. 

Ringas  v.  Biscoe,  91. 

Risdon,  Menser  v.,  173. 

Ritchie,  Fraser  v.,  130. 

Ritter,  Nauvoo  v.,  337. 

Rivanna  Nav.  Co.  v,  Dawson,  81, 
95. 

River  Dee,  etc.  Co.,  Baroness 
Wen  lock  v.,  44. 

Rivers,  New  Orleans  Water  Co. 
v.,  316. 

Riverside  District,  Nesbit  v.,  238. 

Robbins  v.  Chicago,  306,  330. 

Robbins.  Cleveland  R.  Co.  v.,  126. 

Roberts  v.  Deming  Co.,  74. 

Roberts  v.  Ogle,  212. 


Roberts  v.  Van  Buskirk,  129. 
Robertson  v.  Bullions,  92. 
Robertson  v.  Rock  ford,  144. 
Robeson,  Ewing  v.,  51. 
Robie  V.  Sedgwick,  81. 
Robinson  v.  Beale,  130. 
Robinson  v.  Bland,  75. 
Robinson,  Booth  v.,  96.  98,  133. 
Robinson,  Comm.  v.,  176. 
Robinson,  Concord   v.,  223,   228, 

330,  337. 
Robinson.  Ewing  v.,  168. 
Robinson  v.  Smith,  156,  158. 
Robinson  v.  St.  Louis,  188. 
Rochester,  Requa  v.,  304,  206,  220. 
Rochester,  Smith  v.,  319,  322. 
Rochester  Ins.  Co.  v.  Martin,  9. 
Rochester    Sav.    Bank    v.   Aver- 

hill,  9. 
Rock  River  Bank  v.  Sherwood,  9. 
Rockford,  Robertson  v.,  144. 
Rockford,   etc.   Co.,   Harding  v., 

333. 
Rockford  R.  R.  Co.  v.  Sage,  79. 
Rockhold  V.  Canton  Masonic  So- 
ciety, 7. 
Rockwell  V.   Elkhorn  Bank,  96, 

100,  134. 
Rockwell,  Hartridge  v.,  130. 
Rocky  Mountain  National  Bank, 

Union  G.  M.  Co.  v.,  77. 
Roddy  V.  Finnegan,  172. 
Rogers  v.  Burlington,  225. 
Rogers,  Carr  v.,  61. 
Rogers,  Covert  v.,  91. 
Rogers,  East  Tenn.  R.  Co.  v.,  129. 
Rogers,  Konrad  v.,  185. 
Rogers,  McCurdy  v.,  190. 
Rogers  v.  Oxford,  etc.  R.  Co.,  53. 
Rogers,  St.  Joseph  Township  v., 

238,  338. 
Rogers,  Tapsham  v.,  194. 
Rogers    Locomotive    Works    v. 

Southern  R.  Ass'n,  136. 
Rome  V.  Cabot,  188,  317. 
Rome,  Mitchell  v.,  303. 
Rome,  etc.  R.  Co.  v.  Ontario,  etc. 

Co.,  146. 
Roome,  Adriance  v.,  53. 
Root  V.  Goddard.  70. 
Root  V.  Great  Western  R.  Co.,  139. 
Root  V.  Oil  Creek,  etc.  Co.,  146. 
Roper,  Ooregum  M.  Co.  v.,  117. 


Ix 


TABLE   OF   CASES   CITED. 


References  are  to  sections. 


Ropes.  Salem  Mill-dam  Co.  v.,  109, 

118. 
Rosenthal.  Cincinnati  Co.  v.,  71. 
Ross  V.  Clinton,  211. 
Rossi e  L.  M.  Co.,  Moss  v.,  77. 
Rouede  v.  Jersey  City,  227. 
Rouse.  Glasgow  v.,  181. 
Routerberg,  Banking  Co.  v.,  99. 
Rovvell  V.  Williams.  220. 
Royal  Bank  v.  Turquand,  160. 
Royre,     Proprietors     Claremont 

Bridge  v.,  81. 
Roylston   v.   Roylston,   etc.   Co., 

188. 
Roylston  Market  v.  Boston  Asso- 
ciation, 170. 
Ruckman.  Davenport  v„  220. 
Rudolph,  Merchants'  Bank  v.,  161. 
Rufford,  Beman  v.,  137. 
Ruggles  V.  Collier,  9. 
Runnels,  Harris  v.,  69. 
Runyan  v.  Lessee,  etc.,  81. 
Rush  V.  Steamboat  Co.,  51,  168. 
Rushout.  Great  Western  R.  Co. 

v..  .53. 
Rusk  V.  Walsh,  69. 
Russell  V.  De  Grand,  71. 
Russell.  Kirkham  v.,  170,  176. 
Russell  V.  Mayor,  220. 
Russell.  St.  Louis  v..  186. 
Russell  V.  Tapping,  81,  85. 
Rutland,  etc.  R.  Co.,  Chaffee  v., 

124. 
Rutland,  etc.  R.  Co.  v.  Proctor. 

129. 
Rutland,  etc.  R.  Co.,  Stevens  v., 

9,  129. 
Rutland,  etc.  R.  Co.  v.  Thrall,  118. 
Ryan  v.  Dunlap.  161. 
Ryan  v.  Railroad  Co.,  156. 
Rye  V.  Paterson,  212. 

s. 

S.  &  F.  Ry.  Co.,  Whiting  v.,  224, 
Sacchi,  Aspinvvall  v.,  100. 
Safford  v.  Wycoff.  100. 
Safety  Dep.  L.  Co.  v.  Smith.  79. 
Sage  V.  Lake  Shore,  etc.  R.  Co., 

145. 
Sage,  Rockford  R.  Co.  v.,  79. 
Sage,  Welch  v.,  135. 


Saginaw,  Gas  Light  Co.  v.,  199, 

216. 
Sailor,   Savings    Association    v., 

161. 
Salem  v.  Railroad  Co.,  212. 
Salem  Mill-dam  Co.  v.  Ropes,  109, 

113. 
Salem  Mills,  First  Nat.  Bank  v., 

120. 
Salem  Nat.  Bank  v.  Almy,  51, 168. 
Salisbury  Mfg.  Co.,  Treadwell  v., 

83,  133. 
Salt  Lake  City  v.  Hollister,  9,  58, 

74.  163,  223,  233. 
San  Antonio,  Bolton  v.,  235. 
San  Antonio  v.  Mehafley,  62,  63, 

68,  227. 
Sanford  Tool  Co.  v.  Howe,  Brown 

&  Co.,  84. 
San   Francisco.   Argenti   v.,  188, 

190,  191,  192. 

San  Francisco,  De  Witt  v„  185. 
San  Francisco,  Gas  Co.  v.,  171, 

191. 
San  Francisco,  Holland  v.,  9,  14. 
San  Francisco,  Howard  v.,  219. 
San  Francisco,  McCracken  v.,  170, 

191,  191 

San  Francisco,  People  v..  195,  201. 
San  Francisco.  Pimental  v.,  191. 
San  Francisco,  Water  Works  v., 

218. 
San  Francisco,  Wheeler  v.,  129. 
San  Francisco,  Zottman  v.,  201. 
San  Francisco  Dock  Co.,  Vandell 

v..  9. 
San  Francisco  R.  Co.,  Harris  v., 

126. 
Sangamon  Co.  v.  Springfield,  191. 
Sanger  v.  Upton,  107,  112. 
Sankey  Brook  Coal  Co.,  In  re,  125. 
Santa  Ana  Township,  Anderson 

v.,  238. 
Santa  Clara  Female  Academy  v. 

Sullivan,  166. 
Santwood  v.  St.  John,  129. 
Saratoga,  etc.   R.  Co.,  Beekman 

v.,  86. 
Saratoga,  etc.  R.  Co.,  Weed  v.,  129. 
Sargent  v.  Webster,  83,  91. 
Sattrlee,  Chambers  v.,  203. 
Satterthwaite    v.   Beaufort    Co.,. 

177. 


TABLE    OF    CASES    CITED. 


Ixi 


References  are  to  sections. 


Saulsbiiry  v.  Ttliiea,  205. 

Sault  Ste.  Marie  R.  Co.  v.  Van 

Duzen.  104. 
Savage  v.  Ball  100. 
Savanna  v.  Speers,  208. 
Savanna   R.  Co.,  Hazelhurst  v., 

52.  121. 
Savanna  R.  Co.  v.  Lancaster,  96. 
Savings  Association  v.  Sailor,  161. 
Savings  Association  v.   Topeka, 

237. 
Savings  Bank  v.  Bates,  91. 
Savings  Bank  v.  Reed,  162. 
Savings  Fund  v.  Philadelphia,  215. 
Sawmill  Association,  Lovett  v.,  89. 
Sawyer  v.  Coose,  220. 
Sawyer  v.  Hoag,  108. 
Schamrael,  Fanning  v.,  238. 
Schank  v.  Mayor,  177. 
Schenck,  Supervisors  v.,  227. 
Schenley  v.  Commissioners,  173. 
SchnellV.  Chicago,  192. 
School  District,  Clark  v.,  100. 
School  District,  Hewitt  v.,  223. 
School  District,  Keyser  v.,  77. 
School  District  v.  Lombard,  230. 
School  District,  Montague  v.,  100. 
School  District,  Williams  v.,  225. 
School  District,  Wilson  v.,  194. 
Schrauber,  Treadway  v..  170,  192. 
Schultz  V.  Milwaukee,  204. 
Schumaker,  Baltimore,  etc.  R.  Co. 

v.,  129. 
Schuyler.  New  York,  etc.  R.  Co. 

v.,  109. 
Schuylkill  Bank,  Bank  of  Ken- 
tucky v.,  77,  160. 
Schwingle,  Erie  v.,  220. 
Scott,  Indianapolis  v.,  210. 
Scott  V.  Mayor,  220. 
Scott.  Utica  Ins.  Co.  v.,  74,  75. 
Scoville  V.  Thayer,  109,  110. 
Scranton,  Torrej'  v.,  203. 
Screw  Co.,  Hodges  v.,  83,  122,  154, 

156. 
Scroggs,  Keokuk  v.,  170. 
Scudder  v.  Trenton,  etc,  Co.,  183. 
Scully,  Fowler  v.,  69. 
Sea  loam  Ins.  Co.,  In  re,  74. 
Second  Ave.  R.  Co.,  Mayor  v.,  182. 
Sedalia,  Hellen  v.,  219. 
Sedgwick,  Robie  v.,  81. 
Seeger  v.  Mueller,  192. 


Seele  v.  Deering,  213. 
Seeley,  Pacific  R.  Co.  v.,  85. 
Seibrecht  v.  New  Orleans.  50, 
Seignouret  v.  Home  Ins.  Co.,  113. 
Seip,  Slayden  v.,  155. 
Selfi-idge,  People  v.,  3. 
Selma  v.  Mullen,  170. 
Selma,  etc.  R.  Co.,  Blackburne  v., 

81. 
Sennev  v.  East  Wan-en,  etc.  L. 

Ca,  87. 
Sewell  V.  Cahous,  200. 
Sewell  V.  St.  Paul,  222, 
Se  well's  Case,  110. 
Shaffner  v,  St,  Louis,  183. 
Shallcross  v.  Jeffersonville,  175. 
Sharon,  Terrett  v..  198. 
Sharon  Canal  Co.  v.  Fulton  Bank^ 

143,  148. 
Sharp.  Milhan  v.,  215. 
Sharpe,  Planters'  Bank  v.,  77. 
Sharpe  v,  Teese,  69. 
Sharpless  v.  Mayor,  etc.,  224. 
Sharpless  v,  Philadelphia,  181. 
Shaver  v.  Bear  River  M.  Co.,  77. 
Shaw  V.  Boston,  176. 
Shaw  V.  Crocker,  203. 
Shaw  V.  Norfolk  Ry.,  141. 
Shaw  V.  Packet  Co.,  53.  74. 
Shawmut'sBankv.  Pittsburg,etc, 

R.  Co.,  129, 
Shawnee,  Mason  v,,  172. 
Shawnee  Bank,  West  St.  Louis 

Bank  v.,  160, 
Shawneetown  v.  Baker,  195. 
Shea  V,  Mabry,  156. 
Shea,  Southern  Exp.  Co.  v.,  129. 
Sheffield,  Mayor  v.,  200,  206. 
Sheidley  v.  Lynch,  177. 
Sheldon  v,  Kalamazoo,  162. 
Sheldon   Hat  Co.  v.  Fickmeyer, 

83,  106. 
Sheridan  v,  Colvin,  177. 
Sherlock  v,  Winnetka,  185. 
Sherman  v,  Carr,  170. 
Sherman,  Farmers',  etc.  Bank  v., 

77. 
Sherman,  State  v,,  144. 
Sherwood  v.  Alvis,  53,  70. 
Sherwood,  Rock  River  Bank  v.,  9. 
Shetucket  Co,,  Stoddard  v„  126, 
She  ward  v.  Citizens'  Water  Co,, 

218. 


Ixii 


TABLE   OF   CASES    CITED. 


References  are  to  sections. 


Shields  v.  Ohio,  143,  144. 
Shields,  St.  Louis  v.,  101. 
Shieldsboro,  Fieri  v.,  213. 
Shiras  v.  Ewing.  218. 
Shirley,  Houston,  etc.  R.  Co.  v., 

143,  144. 
Shockley  v.  Fisher,  91. 
Shore  v.  Wilson,  94. 
Short,  Pratt  v.,  74. 
Shotwell  V.  Mott,  95. 
Shreveport,  Reynolds  v.,  203. 
Shrewsbury  v.  Brown,  191. 
Shrewsbury,  etc.  Ry.,  Johnson  v., 

71, 137. 
Shrewsbury,  etc.   Ry.  v.   North- 
western Ry.,  55.  70, 128, 137. 
Sibley,  Exchange  Bank   v.,  157, 

158. 
Sibley,  Richardson  v.,  9,  53,  137. 
Siebrecht  v.   New  Orleans,   188, 

190. 
Silk  Co.,  Narragansett  Bank  v., 

100. 
Silliman,  Wiley  v.,  223. 
Silver  Lake  Bank  v.  North,  166, 

167. 
Simmons  v,  Camden,  203. 
Simmons  v.  Providence,  203. 
Simmons  v.  Troy  Iron  Works,  53, 

70. 
Simpson  v.  Denison,  130. 
Simpson,  Mallett  v.,  81. 
Simpson,  Newcastle  Ry.  v.,  119. 
Simpson  v.  Westminster  Co.,  137. 
Sims,  Visalia,  etc.  Gas  Co.  v.,  137. 
Singer  v.  St.  Louis  R.  Co.,  134. 
Skillings,  North  Yarmouth  v.,  186. 
Skinker,  Mathews  v.,  9. 
Skinner,  East  Oakland  v.,  190,  224, 

Skinner  v.  Hall,  129. 
Skinner,  White  v.,  158. 
Slaughter,  Brooklyn  Bridge   Co. 

v.,  9. 
Slaughter,  Gravel  Co.  v.,  50. 
Slayden  v.  Seip,  155. 
Slee  V.  Bloom,  107. 
Slidell  V.  Grandjean,  9. 
Small  V.  Danville,  213. 
Small  V.  Smith,  43. 
Smead  v.  Ind.  etc.  R.  Co.,  9,  96. 
Smelser  v.  Turnpike  Co.,  168. 
Smith  V.  Alexander,  etc.  Co.,  53. 


Smith  V.  Anderson.  153. 

Smith  V.  Bank,  161. 

Smith  V.  Birmingham    Gas    Co.^ 

162. 
Smitli  V.  Bromley,  69. 
Smitli,  Carroll  Co.  v.,  190. 
Smith,  Central  Ry.  Co.  v.,  163. 
Smith  v.  Chesire,  230. 
Smith,  Childs  v.,  3. 
Smith,  Comm.  v.,  83, 133,  134,  137. 
Smith  v.  Eau  Claire,  203. 
Smitli,  Eldridge  v.,  141. 
Smith  v.  Eureka  Flour  Mills,  47,. 

96.  100. 
Smith,  Exchange  Bank  v.,  103. 
Smith  V.  Goldworthy,  113. 
Smith  V.  Hall  Glass  Co.,  77. 
Smith  V.  Insurance  Co.,  70. 
Smith  V.  Ives,  131. 
Smith  V.  Los  Angeles,  etc.  R.  Co., 

146. 
Smith  V.  Low,  96. 
Smith  V.  Manufacturing  Co.,  156. 
Smith  V.  Mawhood,  55. 
Smith  V.  Morse.  215. 
Smith  V.  Nashua,  etc.  R.  Co.,  128. 
Smith  V.  Newburg,  170,  194. 
Smith,  Newell  v.,  129. 
Smith,  People  v.,  183. 
Smith  V.  Putnam,  155. 
Smith,  Robinson  v.,  156,  158. 
Smith  V.  Rochester,  219.  222. 
Smith,  Safety  Dep.  Co.  v.,  79. 
Smith,  Small  v..  43. 
Smith  V.  State,  77. 
Smith  V.  St.  Louis  Ins.  Co.,  137. 
Smith,  Van  Co.  v.,  160. 
Smith  V.  Washington.  201,  203. 
Smith,  Western,  etc.   Co.  v.,  146. 
Smith   Bridge   Co.,   Fort  Worth 

City  R.  Co.  v.,  9. 
Smoot  V.  Mayor,  220. 
Smyth  V.  Bangor,  205. 
Snead,  Richmond,  etc.  R.  Co.  v.,^ 

100. 
Snell  V.  Minneapolis,  etc.  R.  Co., 

53. 
Snyder  v.  Studebaker,  101. 
Society,  etc.  v.  Abbott,  107. 
Society,  etc.  v.  Comm.,  3. 
Solomons  v.  Laing,  53,  121. 
Somerset  Co.,  Cory  v.,  189. 
Somerville  v.  Dickerman,  170, 195» 


TABLE   OF   CASES    CITED. 


Ixiii 


References  are  to  sections. 


Soper  V.  Buffalo  R.  Co..  154. 
South  Ottawa  v.  Perkins,  234. 
South  Carolina  Phos.  Co.,  Brad- 
ley v.,  8. 
South,  etc.  R.  Co.,  Claffin  v.,  132. 
SuUth,   etc.    R.   Co.,   Gilliam    v., 

163. 
Sv^uth,  etc.  R.  Co.  v.  Great  Mt.  Ry. 

Co.,  55,  70.  137. 
South,  etc.  R.  Co.,  Langstone  v., 

135. 
Soutli,  etc.  R.  Co.  V.   Redmond, 

128,  130. 
Southall  V.  Insurance  Co.,  143. 
Southern  Bank,  New  Orleans  v., 

194. 
Soutliern  Exp.  Co.  v.  Shea,  129. 
Southern  Life  Ins.  Co.  v.  Lanier, 

14,  74. 
Southern  Pac.  Co.  v.  Orton,  81. 
Southern  Pac.  Co.,  Rice  v.,  135. 
Southern  Pac.  Co.,  Tex.    Pac.  R. 

Co.  v.,  131. 
Southern  R.    Ass'n,   Locomotive 

Works  v.,  136. 
Sower  V.  Philadelphia,  171. 
Spaulding,  Briggs  v.,  154, 156, 157, 

158. 
Spears,  Savanna  v.,  208. 
Special  Sessions,  People  v.,  171. 
Spering's   Appeal,    147,    153,   154, 

156,  158. 
Spiller  V.  Paris  Rink  Co.,  79. 
Spiral  Springs  Co.,  Dav  v.,  74. 
Spolir  v.  Farmers'  Bank,  12,  168. 
Spradley,  Oxford  Ins.  Co.  v.,  96, 

100. 
Sprague  v.  Hartford  Ins.  Co.,  145. 
Sprague  Mfg.  Co.,  Occura  Co.  v., 

9,  137. 
Spratley,  Paine  v.,  170. 
Spring  Co.,  Co  well  v.,  166. 
Spring  Co.  v.   Knowlton,  69,  73, 

138. 
Springfield  v.  Edwards,  196,  235. 
Springfield  v.  Le  Claire,  320. 
Springfield.  Sangamon  County  v., 

191. 
Springfield.  Stanton  v.,  205. 
Spring  Valley  Township,  Bissell 

v.,  226. 
Spring  Valley  Water  Works  v. 

Bartlett,  335. 


Spring  Valley  Water  Works  t. 

San  Francisco,  218. 
Stace  &  Worth's  Case,  109. 
Stack  V.  Maysville,  177. 
Standard  Oil  Co..  State  v.,  12, 148. 
Standifer  v.  Swann,  88. 
Stanton  v.  Springfield,  205. 
Stark  v.  United  States  Pottery 

Co.,  77. 
Stark  Co.,  Reynolds  v.,  81. 
Starr  v.  Burlington,  173. 
State,  Aicardi,  v.,  8. 
State,  Atlantic,  etc.  R.  Co.  v.,  144. 
State  V.  Bailey,  143,  143,  147. 
State  V.  Baltimore,  etc.    R.    Co., 

146. 
State  V.  Bank,  83. 
State  V.  Bank  of  Maryland,  100. 
State  V.  Bell,  173. 
State  V.  Be  vers,  190. 
State,  Board  of  Education  v.,  225, 
State  V.  Boston,  etc.  R.  Co.,  81. 
Sta-te  V.  Brown,  185. 
State  V.  City  of  Palestine,  235. 
State  V.  Clark,  171,  176,  181. 
State  V.  Cleveland,  173. 
State  V.  Coke  Co.,  199. 
State  V.  College,  83. 
State  V.  Commissioners,  148,  185. 
State  V.  Fisk,  173. 
State  V.  Freeman,  176. 
State  V.  Gas  Co.,  315,  316,  313. 
State  V.  Gaslight  Co.,  318. 
State  V.  Green  Co..  143,  146. 
State  V.  Hanser,  173. 
State  V.  Hammonton,  188. 
State,  Harrison  v.,  199. 
State  V.  Hoboken,  183. 
State  V.  Jersey  City,  173,  174, 176, 

335. 
State  v".  Keokuk,  etc.  R.  Co.,  144. 
State  V.  Madison,  81,  185. 
State,  Mahoney  v..  3. 
State  V.  Mansfield,  81. 
State  V,  Marion  Co.,  170. 
State  V.  Martin,  195. 
State  V.  Mayor,  176. 
State  V.  Milwaukee  G.  L.  Co.,  216. 
State  V.  Montgomery,  835. 
State  V.  McCann.  225. 
State,  McCaslin  v.,  190. 
State  v.  Nebraska  Dis.  Co.,  55. 
State  V.  Newark,  81,  173. 


Ixiv 


TABLE    OF   CASES   CITED. 


References  are  to  sections. 


State  V.  Osawkie  Township,  225. 

State  V.  Passaic,  170. 

State  V.  Paterson,  173. 

State  V.  Railroad  Co.,  144 

State  V.  Sherman,  144. 

State  V.  Smith,  77. 

State  V.  Standard  Oil  Co.,  12, 148. 

State  V.  Stebbins,  47. 

State  V.  Swearingen,  177. 

State  V.  Trenton,  173. 

State  V.  Tryon,  172. 

State  V.  White,  175. 

State  V.  Williams,  172. 

State,  Zimmer  v.,  144. 

State  Bank  v.  Fox,  120. 

State  Bank,  Merchants'  Bank  v., 

160,  162. 
State  Bank  v.  Wheeler,  161,  162. 
State  Board,  etc.  v.  Citizens'  Ry. 

Co.,  9,  191. 
State  National  Bank,  Rich  v.,  77. 
Staten  v.  Morgan,  141. 
Steam  Navigation    Co.   v.   Dan- 

d  ridge,  201. 
Steamboat  Co.  v.  Brown,  129. 
Steamboat  Co.,  Rush  v.,  51,  168. 
Stearns,  Chicago  v.,  205. 
Stebbins,  State  v.,  47. 
Steck  V.  Lancaster,  200. 
Stecket  v.  East  Saginaw,  201. 
Steele  v.  Boston,  204. 
Stefifee,  Comm.  v.,  176. 
Stein  V.  Howard,  115. 
Stephenson,  Pickering  v.,  53,  154. 
Sterling,  Church  v.,  77,  128. 
Sterling  v.  Thomas.  206. 
Stevens,  Attorney-General  v.,  168. 
Stevens  v.  Railroad  Co.,  9,  198. 
Stewart  v.  Brooklyn  R.  Co.,  162. 
Stewart,  Council  Bluffs  v.,  196. 
Stewart,  Empire  Mfg.  Co.  v..  167. 
Stewart  v.  Erie,  etc.  R.  Co.,  9,  53, 

129,  130. 
Stewart  v.  Jones,  141. 
Stillwater,  Bangor  Savings  Bank 

v.,  233. 
Stimson,  Thomaston  Bank  v.,  85. 
Stockdale     v.    Wayland    School 

District,  231, 
Stockford  v.  St.  Louis,  203. 
Stockton  v.  Central  Ry.  Co.,  137. 
Stockton,  etc.  R.  Co.  v.  City  Coun- 
cil, 181. 


Stoddard  v.  Foundry  Co.,  124. 

Stoddard  v.  Shetucket  Co.,  126. 

Stoever,  Payson  v.,  110. 

Stone  v.  Hubbardston,  205. 

Stoudinger  v.  Newark,  207. 

Stoutmore  v.  Clark,  101,  168. 

Stowe  V.  Flagg,  3,  12. 

Strait,  New  Jersey,  etc.  Ry.  Co.  v., 
146. 

Straus,  Hammond  v.,  51,  168. 

Strauss  v.  Eagle  Ins.  Co.,  9,  47,  50. 

Striplen,  Glidden  v.,  61. 

Stuart  V.  London,  etc.  R.  Co.,  77. 

Studebaker  v.  Montgomery,  168. 

Studebaker,  Snyder  v.,  1,  118. 

Sturge  V.  Eastern,  etc.  R.  Co.,  118. 

Sturges  V.  Bank,  161. 

Sturges,  Firemen's  Ins.  Co.  v.,  23. 

Sturtevant  v.  Alton,  188,  201. 

Stutz,  Handley  v.,  107,  109,  110, 
112,  117. 

Stuyvesant  v.  Mayor,  215. 

Sugar  Ref.  Co.,  People  v.,  187, 148. 

Sullivan  v.  Murphy,  100. 

Sullivan,  Santa  Clara  Academy 
v.,  81,  166. 

Sumner  v.  Marcy,  122. 

Sunbur}'  &  Erie  Ry.,  Packer  v., 
8,9. 

Supervisors,  Kennicutt  v.,  228. 

Supervisors,  Migret  v.,  238. 

Supervisors,  Nugent  v.,  143,  146. 

Supervisors  v.  Schenck,  227. 

Supervisors,  Wells  v.,  237. 

Supervisors  of  Lyon  County,  Rich- 
ards v.,  196. 

Susquehanna  Bridge  Co.  v.  Insur- 
ance Co.,  84. 

Susquehanna  Canal  Co.  v.  Bon- 
ham,  141. 

Sussex,  etc.  R.  Co.  v.  Morris,  etc. 
R.  Co.,  8,  10,  130,131. 

Sutherland  v.  Olcott,  109,  113. 

Sutliff  V.  Lake  Co.,  53. 

Sutton  V.  Clark,  203. 

Swackhamer,  Hackettstown  v., 
96. 

Swann,  Standifer  v.,  88. 

Swanspa,  Hull  v.,  74. 

Swauion,  Hopkins  v.,  172. 

Swartout  v.  Michigan,  etc.  R.  Co., 
168. 

Swearingen,  Scott  v.,  177. 


TABLE    OF    CASES    CITED. 


Ixv 


References  are  to  sections. 


Sweet  V.  Wabash.  175. 

Swift.  People  v.,  194. 

Swigert,  Republic  Ins.  Co.  v.,  120. 

Syracuse,  Weston  v.,  196. 

St.  Andrews  Bay  Co.  v,  Mitchell, 

53. 
St.  Anne,  Chicago,  etc.  R.  Co.  v., 

240. 
St.  Charles  R.  Co.,  Canal,  etc.  R. 

Co.  v.,  52. 
St.  Clair  County  Turnpike  Co.  v. 

People,  9. 
St.  Clara  Academy  v.  Sullivan, 

81. 
St.  Francis  Academy,  Milliard  v., 

100. 
St.  John,  Bank  v..  156. 
St.  John,  East  St.  Louis  v.,  86. 
St.  John,  Santwood  v.,  129. 
St.  Joseph,  Thurston  v.,  211. 
St.  Joseph,  etc.  R.  Co.,  Farmers' 

L.  &  T.  Co.  v.,  74.  131. 
St.  Joseph  Township  v.  Amy,  227. 
St.  Joseph  Township  v.  Rogers, 

228,  238. 
St.  Louis  V.  Armstrong,  194. 
St.  Louis  V.  Bank.  171. 
St.  Louis  V.  Bell  Tel.  Co.,  170. 
St.  Louis  V.  Bentz.  212. 
St.  Louis  V.  Buffinger,  177. 
St.  Louis,  Chambers  v.,  81. 
St.  Louis  V.  Gurno,  203. 
St.  Louis  Illinois  Canal  Co.  v.,  215. 
St.  Louis,  Jay  v.,  128,  146. 
St.  Louis  V.  Kaime,  172. 
St.  Louis,  Leslie  v.,  86. 
St.  Louis,  Lockwood  v.,  177. 
St.  Louis,  Page  v.,  177. 
St.  Louis,  Perkins  v.,  190. 
St.  Louis,  Robinson  v.,  188. 
St.  Louis,  Russell  v.,  186. 
St.  Louis,  Shaffner  v.,  188. 
St.  Louis  V.  Shields,  101. 
St.  Louis,  Stockford  v.,  203, 
St.  Louis  V.  Webber,  9, 
St.  Louis  Bridge  Co.  v.  People, 

207. 
St.  Louis  Carriage  Co.  v.  Hilbert, 

120. 
St.  Louis  Gas   Light  Co.   v.    St. 

Louis,  168. 
St.  Louis  Ins.  Co.,  Price  v.,  137. 
St.  Louis  Ins.  Co.,  Smith  v.,  137. 


St.  Louis,  etc.  R.  Co.  v.  Bellville, 

192. 
St.  Louis,  etc.  R.  Co.,  Eakin  v.,  137. 
St.  Louis,  etc.  R.  Co.,  Penn.  etc. 

R.  Co.  v.,  9,  53,  72,  74, 136,  137, 

138. 
St.  Louis,  etc.  R.  Co.  v.  Pipes,  129. 
St.  Louis,  etc,  R.  Co.,  Singer  v., 

134. 
St.   Louis,   etc.   R.   Co.   v.   Terre 

Haute,  etc.  R.  Co.,  53,  73,  138. 
St.  Louis  Stoneware  Co.,  Lafay- 
ette Bank  v..  9. 
St.  Paul,  Cleveland  v.,  206. 
St.  Paul  V.  Coulter,  171,  212. 
St.  Paul,  Darling  v.,  173. 
St.  Paul,  Furnell  v.,  2u5. 
St.  Paul,  Hennesy  v.,  58. 
St.  Paul.  Kaist  v.,  20-3. 
St.  Paul,  Miller  v.,  205. 
St.  Paul,  Nash  v.,  194. 
St.  Paul,  O'Brien  v..  211. 
St.  Paul,  Sewell  v.,  222. 
St.  Paul  V.  Traeger,  170. 
St.  Paul,  etc.  Ass'n,  Bergman  v., 

53. 
St.  Peters  Church,  De  Ruvter  v., 

83. 
St.  Tamany  Water  Works  v.  New 

Orleans  Water  Works,  216. 


Taft  V.  Pittsford,  9,  70,  201. 

Tainter  v.  Worcester.  219. 

Talcott,  Pine  Grove  Township  v., 
238. 

Talldega  Ins.  Co..  McCullough  v., 
77. 

Talldega  Ins.  Co.  v.  Peacock,  100. 

Tallassee  Mfg.  Co.,  Lehman  v., 
105,  135. 

Tallman,  Western  Bank  v.,  128. 

Talmage  v.  North  American  Coal 
Co.,  47,  52. 

Talmage  v.  Pell,  121. 

Talman,  Mobile,  etc.  R.  Co.  v.,  96, 

Tash  v.  Adams,  175. 

Tate,  Indianapolis  v.,  211. 

Taxpayer  v.  Tenn.  etc.  R.  Co.,  337. 

Taylor  v.  Agricultural  Associa- 
tion, 96. 


Ixvi 


TABLE    OF    CASES    CITED. 


References  are  to  sections. 


Taylor  v.  Carondelet,  213. 
Taylor  v.  Chichester,  etc.  R.  Co., 

53,  55,  56,  70. 
Taylor  v.  Earle,  133. 
Taylor  v.  Export  Co.,  130. 
Taylor  v.  Foriuholz,  74,  75. 
Taylor  v.  Phil.  etc.  R.  Co.,  98. 
Taylor  v.  Yonkers,  205. 
Taylor  Mfg.  Co.,  American  Pres. 

Trust  v.,  69,  148. 
Teachout  v.  Des  Moines,  etc.  R. 

Co.,  53. 
Teegarden  v.  Racine,  177. 
Teese,  Sharpe  v.,  69. 
Temperance  Society,  Livingstone 

v.,  120. 
Tench  v.  Railroad  Co.,  163. 
Tennessee  v.  Whit  worth,  148. 
Tennessee,  etc.  R.  Co.,  Taxpayer 

v.,  237. 
Tennessee,  etc.  R.  Co.,  Winston  v., 

235. 
Tenney  v.  Lumber  Co.,  88. 
Terre  Haute  v.  Lake,  301. 
Terre  Haute,  etc.  R.  Co.,  Archer 

v.,  9. 
Terre  Haute,  etc.  R.  Co.,  Jones  v., 

124. 
Terre  Haute,  etc.  R.  Co.,  St.  Louis, 

etc.  R.  Co.  v.,  53,  73,  138. 
Terrett  v.  Sharon,  198. 
Texas  &  Pac.  R.  Co.  v.  Southern 

Pac.  Co.,  131. 
Thayer  v.  Boston,  163,  223. 
Thayer,  Commissioners  v.,  337. 
Thayer,  Norristown  v.,  304,  210. 
Thayer,  Scoville  v.,  109,  110. 
The  Banks  v.  Poiteaux,  81. 
The    Commission,   Munn    v.,   96, 

100. 
Tlie  Hartford  Bridge  Co.  v.  East 

Hartford,  187. 
The  Liberty  Bell,  175. 
Thomas,  County  of  Scotland  v., 

146. 
Thomas  v.  Port  Huron,  74. 
Thomas  v.  Railroad  Co.,  35,  47,  53, 

55,  69,  70,  71,  73,  78,  119,  138, 

137,  138. 
Thomas  v.  Richmond,  73, 138, 172, 

190. 
Thomas,  Sterling  v.,  205. 
Tiiomaston  Bank  v.  Stimpson,  83. 


Thompson  v.  Abbott,  144. 140, 186. 
Thompson,  Horton  v.,  194. 
Thompson,  Hoyt  v.,  159. 
Thompson  v.  Lambert,  96. 
Thompson  v.  Lamont,  84. 
Thompson  v.  Lee,  238. 
Thompson,  Peoria,  etc.  R.  Co.  v., 

131. 
Thompson  v.  Waters,  9,  81. 
Thornton,  Hightower  v.,  108. 
Thornton  v.  Howe,  94. 
Thrall,  Rutland  Ry.  v..  118. 
Thurston  v.  St.  Joseph,  211. 
Tioga  R.  Co.,  Olcott  v.,  100. 
Tippecanoe   Co.  v.  Lafayette   R. 

Co.,  53,  78. 
Tippets  V.  Walker,  158. 
Titcomb,  Clark  v.,  83,  96. 
Titus  V.  Mabee,  131. 
Titus  V.  Railroad  Co.,  159. 
Todd.  Dean  v.,  177. 
Todd  V.  Troy,  210. 
Toledo  V.  Case,  220. 
Toledo,  Harbeck  v.,  183. 
Toledo  Ins.  Co.,  White's  Bank  v., 

9,  47,  100. 
Toll  Bridge  Co.  v.  Osborn,  9. 
Tolleston  Club,  Alexander  v.,  81. 
Tombigbee  v.  Kneeland.  165,  166. 
Tomlinson  v.  Branch,  146,  148. 
Tone  V.  Mayor,  230. 
Toolan,  Lansing  v.,  202. 
Tooley.  AtheuEeum,  etc.  Co.  v.,  74. 
Topeka,  Citizens'  Savings,  etc.  v., 

181,  337. 
Topeka  v.  Huntoon,  177. 
Topeka,  Loan  Association  v.,  179, 

181,  324,  325,  238. 
Topeka  Bank,  Pratt  v.,  161. 
Tappenden  v.  Randall,  69. 
Topping,  Russell  v.,  81,  85. 
Topsham  v.  Rogers,  194. 
Torrey  v.  Scranton,  203. 
Touche  v.  Warehousing  Co.,  79. 
Town  Council,   Albright  v.,  188. 
Town  of  Depere  v.  Bellevue,  186. 
Town  of  Durango  v.  Pendleton, 

201.     " 
Town  of  Durango  v.  Pennington, 

189. 
Town  of  Lake,  Drexel  v.,  207. 
Town  of  Middleport  v.  ..Etna  Ins. 

Co.,  240. 


TABLE    OF   CASES   CITED. 


Ixvii 


Eeferences  are  to  sections. 


Townsend  v.  Brown,  8. 
Townsend.  Logan  Co.  Bank  v.,  74. 
Tracy  v.  Guthrie  Co.,  76. 
Traeger,  St.  Paul  v.,  170. 
Transportation  Co.,  Bank  v.,  120. 
Transportation    Co.   v.    Chicago, 

203. 
Transportation      Co.,      Farmers' 

Bank  v.,  129. 
Transportation  Co.,  Railroad  Co. 

v..  129. 
Trapshagen  v.  Jersey  City,  207. 
Treadway  v.  Schrauber,  170,  190. 
Treadweil  v.  Salisbury  Mfg.  Co., 

83,  133. 
Trenton,  State  v.,  173. 
Trenton,  etc.  Co.,  Scudder  v.,  183. 
Trevor  v.  Whitworth,  45, 117, 120. 
Trigally  v,  Memphis,  171. 
Trinity  Church,  Bogardus  v.,  81. 
Tripp,  Aldrich  v.,   222. 
Tripp,  Inman  v.,  211. 
Troop,  People  v.,  176. 
Trott  V.  Warren,  194. 
Trotter.  Chicago  v.,  176. 
Troupe's  Case,  77. 
Troy,  Francis  v.,  170. 
Troy,  Todd  v.,  210. 
Troy  Iron  Works,  Simmons  v.,  53, 

70. 
Troy,  etc.  R.  Co.   v.   Boston,  etc. 

R.  Co.,  9. 
Troy,  etc.  R.  Co.,  Buffet  v.,  13, 128. 
Troy,  etc.  R.  Co.  v.  Kerr,  137. 
Trumpler  v.  Bernerly,  86. 
Trust  Co.,  Ohio  Ins.  Co.  v.,  74. 
Trustees,  Congregational  Church 

v.,  94. 
Trustees  v.  King,  95. 
Trustees,  Northern  Bank  v.,  228. 
Trustees  v.  Peaslee,  15,  93. 
Trustee,  People  v.,  186. 
Trustees,  Walsh  v.,  3. 
Tryon,  State  v.,  172. 
Tuckahoe  Canal  Co.  v.  Railroad 

Co.,  216. 
Tucker  v.  City  of  Raleigh,  96. 
Tucker,  Fry  v.,  128. 
Tuckerman  v.  Brown,  108. 
Tugman  v.  Chicago,  176. 
Tullis,  Cook  v.,  77. 
Tunis,  Osborn  v.,  90. 
TurnbuU  v.  Payson,  127. 


Turner,  Vrooman  v.,  219. 
Turner,  Webster  v.,  83. 
Turnpike  Co.  v.  Illinois,  8. 
Turnpike  Co.,  Sraelser  v.,  168. 
Turquand  v.  Marshall,  158. 
Turquand,  Royal  Bank  v.,  160. 
Twiss  V.  Life  Association,  74. 
Tyler  v.  Beacher,  181,  225. 
Tyson  v.  Milwaukee,  203. 

TJ. 

Ulery,  Greincr  v.,  101. 
Underwood  v.  Green,  212. 
Union  Bank  v.  Elliott,  91. 
Union  Bank,  Irvine  v.,  70. 
Union  Bank  v.  Jacobs,  96,  98,  100. 
Union  Gold   Min.    Co.    v.    Rocky 

Mountain  Nat.  Bank,  77. 
Union   Hardware  Co.  v.  Plume 

Co..  74. 
Union  Min.  Co.  v.  Bank,  96. 
Union  Pac.  R.  Co.  v.  Cheyenne, 

177. 
Union  Pac.  R.  Co.,  Chicago,  etc 

R.  Co.  v.,  19,  71. 
Union  Pac.  R.  Co.,  Leo  v.,  105. 
Union  Pac.  R.  Co.  v.  Lincoln  Co. 

235. 
Union  Pac.  R.  Co.,  McAlpine  v, 

146. 
Union  Pac.  R.  Co.,  Piatt  v.,  105 
Union  Pac.  R.  Co.,   Whipple   v. 

146. 
Union  Plate  Glass  Co.,  In  re,  114. 
Union  R.  Co.  v.  Railroad  Co.,  64. 
Union  Steamboat  Co.,  Green  Bay, 

etc.  R.  Co.  v.,  9,  47,  53,  129, 

136,  137. 
Union  Tool  Co.,  Utley  v.,  3. 
Union    Township,   Gibonnev   v., 

194. 
Union  Trust  Co.  v.  111.  etc.  Co., 

138. 
Union  Trust  Co..  Whiting  v.,  77. 
Union  Water  Co.  v.  Memphis,  etc. 

Co.,  64. 
United  Companies,  Black  v..  8. 
United  Gas  Co.,  Gas  Light  Co.  v., 

74,  137. 
Union  Service  Co.,  In  re,  120. 
United  States,  Dickson  v.,  82. 


Ixviii 


TABLE    OF    CASES    CITED. 


References  are  to  sections. 


United  States  v.  Ft.  Scott,  196. 
United  States,  International  Co. 

v.,  77. 
United  States  v.  New   Orleans, 

179. 
United  States  Bank  v.  Hoth,  83, 

100. 
United  States  Pat.  Co.,  Stark  v., 

77. 
Unity  Ins.  Co.  v.  Cram,  3. 
University,  Louisville  v.,  185. 
University  v.  Yarrow,  94. 
Upton,  Chubb  v.,  106,  112. 
Upton  V.  Hansborough,  51,  168. 
Upton,  Pullman  v..  112. 
Upton,  Sanger  v.,  107,  112. 
Upton  V.  Tribilcock,  112. 
Upton,  Webster  v.,  106.  112. 
Upton.  Whittenton  Mills  v.,  9, 53, 

148. 
Urquhart  v.  Ogdensburg,  202. 
Utica  In.s.  Co.  v.  Bloodgood,  75. 
Utica  Ins.  Co.  v.  Caldwell,  75. 
Utica  Ins.  Co.  v.  Kep,  69. 
Utica  Ins.  Co.,  People  v..  9, 12,  22. 
Utica,  etc.  Co.,  Mohawk  Bridge 

Co.  v.,  8. 
Utica  Water  Works,  Johnson  v., 

86. 
Utley  v.  Union  Tool  Co.,  3. 

Y. 

Vail  V.  Hamilton,  9. 

Valentine,  Champlain  R.  Co.  v., 

81.- 
Valette,  Canal   Co.  v.,  83,  91,  96, 

100. 
Valley  District,  Barker  District 

V.',  186. 
Vallev  Railroad  Co.  v.  Insurance 

Co..  121. 
Valparaiso  v.  Adams,  203. 
Van  Alstyne,  Lockhart  v.,  123. 
Van  Buskirk,  Roberts  v.,  129. 
Van  Co..  Sraitli  v.,  160. 
Van  Duzen,  Sault  Ste.  Marie  R. 

Co.  v.,  194. 
Van  Dyke  v.  McQuade,  156. 
Van  Horn  v.  Des  Moines,  219. 
Van  Houton  v.  Dutch  Church,  94. 
Van  Pelt  v.  Davenport,  209,  211. 


Van  Reuth,  Kean  v.,  168. 
Van  Santford,  Merrick  v.,  166. 
Van  Vechten,  Randall  v.,  77,  158. 
Vance  v.  Erie,  etc.  R.  Co.,  162. 
Vance  v.  Insurance  Co..  156. 
Vance  v.  Little  Rock,  170. 
Vance,  Railroad  Co.  v.,  9. 
Vandall  v.  San  Francisco  D.  Co.,  9. 
Vaughan,   Eastern    Plank   Road 

Co.  v.,  3. 
Vermont,  etc.  R.  Co.,  Chapin  v., 

135. 
Vermont,  etc.  R.  Co.  v.  Clayers.  3. 
Vermont,  etc.  R.  Co.,  Ogdensburg. 

etc.  R.  Co.  v.,  9. 
Vermont,  etc.  R.  Co.,  White   v., 

135. 
Vernon,  Hanson  v.,  181,  224. 
Vicksburg,  Crais;  v.,  135. 
Vidal  V.  Girard,  92,  93,  94. 
Vinalhaven,  Brown  v.,  213. 
Vincent,  Walker  v.,  87. 
Vinei',  Bartlett  v.,  55. 
Virginia  City,  Douglas  v.,  50, 188. 
Visalia,  etc.  Gas  Co.  v.  Sims,  137. 
Vrooman  v.  Turner,  219. 

w. 

Wabash,  Sweet  v.,  175. 
Wabash,  St.  Louis,  etc.  R.  Co.  v. 

Ham.  144. 
Waddill  V.  Alabama  R.  Co..  53. 
Waddill,  Grand  Lodge  v..  70. 
Wade  V.  American,  etc.  Society, 

92. 
Wade  V.  Richmond,  198. 
Wahl  V.  Holt,  129. 
Wakeman  v.  Dalley,  158. 
Walker,  Blount  v.,  81. 
Walker  v.  Cliapman,  69. 
Walker  v.  Cincinnati,  70. 
Walker  v.  Railroad  Co.,  163. 
Walker  v.  Tippets,  158. 
Walker  v.  Vincent,  87. 
Wall  V.  Monroe  County.  230. 
Wallis,  Birmington  v.,  69. 
Walsh,  Aubert  v.,  69. 
Walsh  v.  Augusta,  196. 
Walsh,  Rusk  v.,  69. 
Walsh  v.  Trustees,  3. 
Walworth  v.  Holt,  107. 


TABLE    OF    CASES    CITED. 


Ixix 


References  are  to  sections. 


Ward  V.  Davidson.  158. 
Ward  V.  Griswoldville.  107. 
Ward  V.  Johnson.  96.  100. 
Ward,  Marvin  Safe  Co.  v.,  219. 
Ware  v.  Grand  Junction,  etc.  Co., 

53. 
Ware  v.  Regents  Canal  Co.,  53. 
Wareham,  Dill  v.,  119. 
Warehousing  Co.,  Touclie  v.,  79. 
Warner,  Blanchard's  Factory  v., 

81. 
Warner,  Whitewell  v.,  77,  91. 
Warren,  Bank   of  Virgennes  v., 

160. 
Warren  v.  Henley,  181. 
Warren  v.  King,  119. 
Warren  v.  Mobile,  etc.  R.  Co.,  146. 
Warren,  Trott  v.,  194. 
Warren    Bridge,   Charles    River 

Bridge  Co.  v.,  8,  9,  28. 
Warren  County,  Richards  v..  190. 
Washington,  Smith  v.,  201,  203. 
Washington,  Weightnian  v.,  220. 
Washington  Avenue,  In  re,   225. 
Washington,  etc.  R.  Co.,  Gruber 

v.,  162,  163. 
Wasmer  v.  Delaware,  etc.  R.  Co., 

137. 
Waterbur}^   Button   Co.,  Nauga- 

tuck  R.  Co.  v.,  53. 
Water  Co.,  Brenham  v..  170,  188. 
Water  Co.,  Goundie  v.,  81. 
Water  Co.,  Memphis  v.,  216. 
Water  Power  Co.,  Dupee  v.,  83, 

120. 
Waterproof  Co.,  Perry  v.,  77. 
Waters  v.  Leech,  171. 
Waters,  Thompson  v.,  9.  81. 
Watertown,    etc.    Co.,   Madison, 

etc.  Co.  v.,  9. 
Watertown,  etc.  Co.,  Plank  Road 

Co.  v.,  96,  136. 
Water  Works,  New   Orleans  v., 

180. 
Watson  V.  Bennett,  161. 
Watson,  Mobile  v.,  233. 
Watts'  Appeal,  84,  100. 
Wayland  School  District,  Stock- 
dale  v.,  231. 
Weare  v.  Fitchburg,  205. 
Weare,  Petroleum  Co.  v.,  166. 
Webb  V.  Heme  Bay,  134. 
Webb,  Martin  v.,  160. 


Webber,  St.  Louis  v.,  9. 
Weber,  People  v.,  170. 
Webster,  Buffalo  Ins.  Co.  v.,  52. 
Webster,  Burnham  v.,  160. 
Webster  v.  Harrington,  198. 
Webster  v.  Howe  Machine  Co., 

104. 
Webster,  Sargent  v.,  83,  91. 
Webster  v.  Turner,  83. 
Webster  v.  Upton,  106,  112. 
Weckler  v.  First  National  Bank, 

9,50. 
Weed,  Combination  Trust  Co.  v., 

105. 
Weed  v.  Saratoga,  etc.  R.  Co.,  129. 
Weeden  v.  Mad  River,  etc.  Co.,  77. 
Weet  v.  Brockport,  219. 
Wehrung,  East  St.  Louis  v.,  173. 
Weible,  Louisville  v.,  216. 
Weider,  Livingston  Co.  v.,  235. 
Weightman  v.  Washington,  220. 
Weir  v.  Bell,  158. 
Weis  V.  Madison,  211. 
Weismer  v.  Douglas,  181,  237. 
Weissgerber,  Eyser  v.,  74.  75. 
Weith  V.  Wilmington,  170. 
Welch  V.  Sage,  135. 
Wells  V.  Atlanta,  177,  188,  217. 
Wells  V.  Burnham,  189. 
Wells,  Gilham  v.,  176. 
Wells  V.  Supervisors,  237. 
West,  Aurora  v.,  135.  237. 
West  Chester  Ry.  Co.,  Everhardt 

v.,  118. 
West   Guillimbury    v.    Railroad 

Co.,  198. 
West  V.  Mayor,  178. 
West  V.  Menard  Co.,  90. 
West  Orange,  J^ield  v.,  203. 
West  Point,  etc.  Ass'n,  Poole  v., 

110. 
West  River,  etc.  Co.  v.  Dix,  183. 
West  St.  Louis  Bank  v.  Shawnee 

Bank,  160. 
West  Troy,  Cowan  v.,  189,  194. 
Western  Bank  v.  Tallman,  128. 
Western    College    v.    Cleveland, 

170,  202,  219. 
Western  Cottage  Co.  v.  Reddish, 

100. 
Western  News  Co.  v.  Wilmarth, 

162. 
Western  Screw  Co.  v.  Cousley,  79. 


Ixx 


TABLE    OF   CASES    CITED. 


References  are  to  sections. 


Western  Union  Tel.  Co.,  Bell  v., 

139. 
Westei-n   Union   Tel.   Co.,   Com- 

pagnie  Franoaise  v.,  121. 
Western  Union  Tel.  Co,  v.  Mayer, 

166. 
Western  Union  Tel.  Co.,  Pacific 

P.  Tel.  Co.  v.,  53. 
Western  Union  Tel.  Co.,  Pensa- 

cola,  etc.  Co.  v.,  160. 
Western  Union  Tel.  Co.  v.  Smith, 

146. 
Western   Union   Tel.   Co.,   Will- 
iams v.,  134. 
Westinghouse  Mach.  Co.  v.  Wil- 
kinson, 7,  9. 
Westlake,  Pangborn  v.,  69. 
Westminster  Board,  Aukland  v., 

53. 
Westminster  Co.,  Simpson  v.,  137. 
Weston  V.  Syracuse,  196. 
Wetherell  v.  Jones,  55. 
Wetmore  v.  Parker,  93. 
Weymouth  Packet  Co..  In  re,  117. 
Wheeler  v.  Chicago,  191. 
Wheeler  v.  Cincinnati,  170,  219. 
Wheeler,  Ohio,  etc.  R.  Co.  v.,  145. 
Wheeler,  Parish  v.,  129. 
Wheeler  v.  San  Francisco,  129. 
Wheeler,  State  Bank  v.,  161,  162. 
Wheeler,  etc.  Mfg.  Co.  v.  Boyce, 

163. 
Wheelock  v.  Moulton,  00. 
Whipple,  Curtis  v.,  224. 
Whipple  V.  Union  Pac.  R.  Co.,  146. 
White  V.  Bass,  69. 
White  V.  Franklin  Bank,  69,  74, 

75  119. 
White  V.  Howard,  82. 
White  V.  Manufacturing  Co.,  79. 
White  V,  Skinner.  158, 
White,  State  v.,  175. 
White  V.  Vermont,  etc.   R   Co., 

135. 
White  V.  Yazoo  City,  202,  203. 
White  Line  Trans.  Co.,  Lucas  v., 

4,  9,  38,  52,  70. 
White's  Bank  v.  Toledo  Ins.  Co., 

9,  47,  100. 
Whitewater   Valley,   etc,   Co,  v. 

Valette,  83,  91,  96,  100. 
Whitewell  v.  Warner,  91. 
Whitfield  V,  Railroad  Co.,  162, 


Whiting  V.  S.  &  F.  R.  Co.,  224. 
Whiting  V.  Union  Trust  Co.,  77. 
Whitman  M.  Co.  v.  Baker,  47,  81. 
Whitney  v.  Mayor,  178. 
Whitney,  National  Bank  v.,  58, 
Whitney  v.  Peay,  74, 
Whitney  v.  Wyman,  51, 56,  79, 168. 
Whitney  Arms  Co.  v.  Barlow,  55, 

56,  58,  61,  63,  64,  66,  68. 
Whittenton  Mills  v.  Upton,  9,  53. 

148. 
Whittle  V.  Derby  Fish  Co.,  15. 
Whittle.  Planters'  Bank  v.,  91. 
Whitwell  V.  Warner,  77. 
Whitworth,  Tennessee  v.,  148. 
Whitworth,  Trevor  v.,  45, 117, 120. 
Whyte  V.  Mayor,  212. 
Widrig  V.  Newport  Co.,  158, 
Wilcox,  Oakland  Bank  v,,  159, 
Wild  V,  Bank,  160. 
Wiggins  V.  New  York,  177, 
Wiggins  Ferry  Co,   v.   Railroad 

Co.,  129, 
Wiley  V,  Silliman,  223, 
Wilkes  V.  Georgia,  etc,  R,  Co,,  53. 
Wilkins  v,  Detroit,  189. 
Wilkinson  v.  Bauerle,  91. 
Wilkinson,  Cohen  v..  53. 
Wilkinson  v.  Peru,  235. 
Wilkinson,  Westinghouse  Mach. 

Co.  v.,  7,  9. 
Willamette  Co.  v.  Bank,  9,  53. 
Willey  V,  Greenbush,  230, 
Williams,  Ex  parte,  135, 
Williams  v.  Augusta,  212. 
Williams  v.  Bank,  74, 
Williams  v.  Creswell,  166, 
Williams  v.  Davidson,  170,  173. 
Williams  v,  Hedley,  69, 
Williams,  Helfrich  v.,  164. 
Williams  v.  Insurance  Co.,  162. 
Williams,  Kernaghan  v.,  53, 
Williams  v.  New  Jersey,  180. 
Williams  v.  Parker,  116. 
Williams,  Rowell  v.,  220. 
Williams  v.  School  District,  225. 
Williams,  State  v.,  172. 
Williams  v.  Western  Union  Co., 

124. 
Williams  College   v.   Cleveland. 

220. 
Williamson,  Ex  parte,  98. 
Williamsport  v.  Comm.,  188, 


TABLE    OF    CASES    CITED. 


Ixxi 


References  are  to  sections. 


Williston  V.  Michigan  R.  Co.,  124. 
Wilmington,  Weith  v..  170. 
Wilson,  Adams  Exp.   Co.  v.,  129. 
Wilson,  Attorney-General  v.,  153. 
Wilson  V.  Charlotte,  177. 
Wilson,  Danbur3%  etc.  R.  Co.  v.,  9. 
Wilson  V.  New  Bedford,  211. 
Wilson  V.  School  District,  194. 
AVilson,  Shore  v.,  94. 
AVinans,  York,  etc.  R.  Co.  v.,  9. 

128,  137. 
Winchester  v.  Birkshire,  etc.  R. 

Co.,  137. 
Windsor  Mfg.  Co.,  Beckwith  v., 

88. 
Winegar,  Grand  Chute  v.,  228. 
Winfield,  Mayor  v.,  176. 
Winnetka,  Sherlock  v..  185. 
AVinston,   Tenn.   etc.  R.    Co.  v., 

235. 
Winter,  Bates  Co.  v.,  190. 
Winter  v.  City  Council,  239. 
Winters  v.  Armstrong,  109,  111. 
Winthelm  v.  Cedar  Co.,  194. 
Winthrop  Ins.  Co.,  Meeker  v.,  139. 
W^iegand.  Citizens'   Bank  v.,  159. 
Wisconsin  Cent.  R.  Co.,  Bound  v., 

197. 
Wiswall  V.  Greenville,  etc.  Co.,  9. 
Wittee  V.  Derby  Fishing  Co..  15. 
Wolcott,  Ouachita  Co.  v.,  230. 
Wood  V.  Dummer,  107. 
Wood  County,  Reeves  v.,  86. 
Wood  Hydraulic  Co.  v.  King,  166. 
Wood,  Louisiana  v.,  191,  233. 
Woodbridge  v.  Proprietors,  etc., 

77. 
Woodcock  V.  Calais,  213. 
Woodruff  V.  Erie  R.  Co.,  9. 
Woodward,    Dartmouth   College 

v.,  9,  21,  28,  50. 
Woolsey,  Dodge  v.,  53. 
Worcester,  Commissioners  v.,  176, 

212. 
Worcester,  Tainter  v.,  210. 
Workingmen's   Banking    Co.    v. 

Routerberg.  99. 
Worthington.  North  Side  Rj'.  Co. 

v.,  7. 
Wright  V.  Augusta,  219. 


Wright  v.  Bishop,  235. 
Wright  v.  Carter,  8. 
Wright  v.  Nagle,  199. 
Wright  V.  Railroad  Co.,  172. 
Wulfekehlen,    Gei-man    Savings 

Bank  v.,  120. 
Wyandotte  v.  Zeitz,  188. 
Wycoff,  Safford  v.,  100. 
Wylde  v.  North  River,  etc.  Co., 

129. 
Wyraan,  Whitney  v.,  51,  56,  79, 

168. 

X. 

Xenia,  Bloom  v.,  170. 


Y. 

Yancey  v.  Hopkins,  190. 
Yarrow,  University  v.,  94. 
Yates,  Berry  v.,  121. 
Yates  V.  Milwaukee,  212. 
Yazoo  City,  White  v..  202,  203. 
Yonkers,  Taylor  v.,  205. 
York,  etc.  R.  Co.  v.  Hudson.  153. 
York,  etc.  R.  Co.  v.  Winans,  128, 

137. 
Young   v.  Clarendon  Township, 

223,  230,  237. 
Young,  Davidson  v.,  192. 
Young  V.  Gaslight  Co.,  53. 
Young,  National  Bank  of  Repub- 

Hq  v.,  104. 
Yount,      American       Christian 

Union  v.,  81,  166. 


Zabriskie  v.  Cleveland,  etc.  R.  Co., 

9.  53,  76,  135. 
Zabriskie,  Crorapton  v.,  198. 
Zeitz,  Wyandotte  v..  188. 
Zellerbach.  Miners'  Ditch  Co.  v., 

9,  33,  83,  87. 
Zimmer  v.  State,  144. 
Zottman  v.  San  Francisco,  201. 
Zulueta's  Case,  120. 


THE  DOCTRLNE  OF  ULTRA  VIRES 


IN 


THE  LAW  OF  CORPORATIONS. 


CHAPTER  I. 

CREATION   AND    CONSTRUCTION    OF   CORPORATE   CHAR- 

TERS. 

Pakt  I. 

CREATION    OF   CHARTERS. 

§  1.  Introductory. 

2.  A  corporation  a  legal  entity. 

3.  Creation  of  chartered  corporations. 

4.  What  acceptance  of  charter  implies. 

5.  Distinction  between  natural  and  artificial  persons. 
'6.  Distinction  between  corporation  and  partnership. 

7.  Distinction  between  corporations  under  general  and  special  act. 

§  1.  Introductory. —  As  the  doctrine  of  tiltra  vires  can 
be  legitimately  applied  only  to  the  acts  of  a  corporation 
■as  such,  acting  by  and  through  its  authorized  agents  or 
representatives,  it  might  be  well  to  here  state,  upon  the 
threshold  of  the  subject,  the  position  taken  in  these  pages 
regarding  the  general  character  and  attributes  of  this 
much  anathematized  creature  of  the  law,  which  has  oc- 
casioned so  much  legal  investigation  and  has  called  forth 
at  times  such  vigorous  judicial  condemnation. 
1 


2  CREATION    AND    CONSTRUCTION.  [§§  2,  3. 

§  2.  ^  corporation  a  legal  entity. —  It  will  be  assumed, 
in  the  examination  of  the  doctrine  to  be  hereafter  dis- 
cussed, that  a  corporation,  both  under  the  common  law 
and  as  now  organized  and  created  under  our  state  laws, 
is  a  legal  entity,  separate  and  distinct  from  the  members 
who  compose  it ;  that  in  the  corporation  —  the  creature  of 
the  law  —  is  vested  all  the  property  and  powers  of  the 
company ;  that  it  can  only  be  affected  by  such  acts  and 
agreements  as  are  done  or  executed  on  its  behalf  by  its 
corporate  agencies,  aotin//  within  the  legitimate  scope  of  its 
chartered  powers',  and  that  no  acts  or  contracts  by  the 
officers  or  agents  of  the  company  beyond  the  scope  of  its 
powers,  as  prescribed  and  designated  in  its  charter  or  ar- 
ticles of  association,  can  be  ascribed  to  the  corporation  — 
the  legal  entity  —  though  done  and  concurred  in  by  each 
and  all  of  the  stockholders.  It  would  seem  from  a  care- 
ful examination  of  the  authorities  and  adjudications  that 
the  foregoing  propositions  as  to  the  nature  of  a  corpora- 
tion would  go  unchallenged ;  but,  unfortunately,  there  is 
now  in  this  country  a  newer  growth  of  corporation  law- 
yers and  authors,  fostered  and  fashioned  in  the  same 
school,  who  would  confuse  the  subject  by  regarding  the 
rights,  duties  and  powers  of  a  corporation  as  identical 
with  the  rights,  duties  and  powers  of  the  individuals  com- 
posing it.  To  recognize  such  an  anomalous  position  would 
clearly  nullify,  in  a  great  measure,  the  whole  doctrine  of 
ultra  vires. 

%  3.  Creation  of  chartered  corjyorations. —  Corporations 
can  now  be  created  and  exist  only  by  virtue  of  legislative 
enactment.^  And  to  create  a  corporation  by  legisla- 
tive act  no  express  words  are  requisite ;  any  words  de- 

1  Stowe  V.  Flagg,  72  111.  397;  Hadley  v.  Commissioners,  105  Mass. 
526;  Franklin  Bridge  Co.  v.  Wood,  14  Ga.  80. 


§  3.]  CREATION    OF    CHARTERS.  3 

scriptive  of  the  legislative  purpose  are  sufficient.^  The 
mauner  in  which  private  corporations  may  be  organized 
is  now  usually  prescribed  by  most  of  the  states  of  the 
Union  by  general  laws,  the  constitutions,  with  perhaps 
few  exceptions,  prohibiting  special  acts  of  incorporation. 
But  the  authority  to  organize  corporations  under  general 
laws  rather  than  by  special  act  of  the  legislature  is  not 
intended  to  Avork  any  material  change  in  their  nature  or 
character.  The  legislatures  of  the  respective  states  have 
prescribed  methods  for  the  creation  of  corporations  which 
were  unknown  to  the  common  law,  endowing  them  with 
special  powers  of  management  and  limitations  as  to  lia- 
bility, and  providing  at  the  same  time  that  all  the  world 
should  have  notice  who  were  the  persons  authorized  to 
manage  and  control  the  corporation  and  bind  all  the 
stockholders  thereof  by  requiring  the  charter  to  be  re- 
corded, certified  by  the  directors  and  made  accessible  to 
all.  Under  general  incorporation  law,  when  the  instru- 
ment specifying  the  objects,  conditions  and  name  of  the 
association,  and  whatever  else  the  law  may  require,  has 
been  approved  by  the  proper  officers  and  enrolled  accord- 
ing to  law,  the  persons  so  associating  become  a  corpora- 
tion according  to  the  objects  and  conditions  and  vested 
with  the  powers  and  privileges  contained  and  specified  in 
the  instrument.  These  become  their  charter,  and  have 
the  same  force  and  effect  in  law  as  if  they  were  specific- 
ally granted  by  special  act.^  Powers  and  privileges  speci- 
fied in  such  instrument,  however,  which  contravene  or 
are  beyond  the  provisions  of  the  statute  are  null  and 

iRex  V.  Amery,  1  Term  Rep.  575;  Conservators  v.  Ash,  10  B.  &  C. 
349;  Grangers'  Ins.  Co.  v.  Kamper,  73  Ala.  325;  Mahoney  v.  State 
Bank,  4  Ark.  620;  Denton  v.  Jackson,  2  John.  Ch.  325;  Walsh  v.  Trust- 
ees, etc.,  96  N.  Y.  427. 

2  Society,  etc.  v.  Commonwealth,  52  Pa.  St.  125. 


4  CKEATION    AND    CONSTKUCTION.  [§  3. 

void,^  and  all  acts  done  in  pursuance  of  such  provisions 
will  be  void.-  But  whatever  be  the  mode  prescribed  by 
the  act  under  w^hich  incorporation  is  had,  substantial 
compliance  with  all  its  provisions  is  required  before  the 
corporation  can  be  said  to  be  in  esse.^  A  corporation 
created  according  to  the  rules  of  the  common  law  must 
be  governed  by  it  in  its  mode  of  organization,  in  the  man- 
ner of  exercising  its  powers  and  in  the  use  of  the  capacities 
conferred;  when  created  in  disregard  of  those  rules,  how- 
ever, the  existence,  powers,  capacities,  and  the  mode  of 
exercising  them,  must  depend  upon  the  law  of  its  creation.* 
The  charter  and  not  the  organization  under  it  creates  the 
subscribers  a  corporation,  at  least  so  far  as  to  render  con- 
tracts for  or  against  the  corporation  valid.'  A  corpora- 
tion, being  an  artificial  creation,  is  the  very  thing  it  is 
made  by  the  statute  which  brought  it  into  being,  and 
nothing  more.^  In  Grangers'  Life  S  Health  Insurance 
Company  v.  JTamper,  supra,  the  court,  in  discussing  the 
manner  of  organizing  corporations  under  statutory  enact- 
ments, said :  "  The  mode  of  incorporation  the  statutes  have 

iHeck  V.  McEwin,  76  Tenn.  97;  Eastern  Plank  Road  Co.  v. 
Vaughan,  14  N.  Y.  546;  Grangers',  etc.  Ins.  Co.  v.  Kamper,  73  Ala. 
325;  Medical  College  Case,  3  Whart.  (Pa.)  445. 

2  Eastern  Plank  Road  Co.  v.  Vaughan,  supra. 

3  Harris  v.  McGregor,  29  Cal.  124;  People  v.  Self  ridge,  53  Cal.  331; 
Mclntire  v.  McLain  Ditching  Co.,  40  Ind.  104;  Indianapolis,  etc.  Min. 
Co.  V.  Herkimer,  46  id.  142;  Reed  v.  Richmond  St.  Ry.  Co.,  50  id.  342; 
Richmond  Factory  Co,  v.  Alexander,  61  Me.  351;  Grangers'  Life,  etc. 
Asso.  V.  Kamper,  73  Ala.  325;  Oregon  Ry.  v.  Oregonian  Ry.,  130 
U.  S.  1;  Utley  v.  Union  Tool  Co.,  11  Gray  (Mass.),  139;  Doj-le  v.  Miz- 
ner,  42  Mich.  333;  Abbott  v.  Omaha  Smelt.  Co.,  4  Neb.  416;  Unity 
Ins.  Co.  V.  Cram,  43  N.  H.  636;  Childs  v.  Smith,  55  Barb.  (N.  Y.) 
45,  53. 

*  Penobscot  Boom  Co.  v.  Lamson,  16  Me.  334. 

5  Vermont  Ry.  Co.  v.  Clayes,  21  Vt.  30. 

^  Oregon  Ry.  Co.  v.  Oregonian  Ry,,  Co.,  supra. 


§  3.]  CREATION    OF   CHARTEES.  5 

carefully  prescribed.  The  persons  proposing  to  be  incor- 
porated must  file  and  cause  to  be  recorded  in  a  designated 
public  office  a  declaration  in  writing  stating  the  name  of 
the  corporation,  the  objects  for  which  it  was  formed,  the 
amount  of  capital  stock,  the  number  of  shares  into  which 
it  is  divided,  the  names  of  the  stockholders,  and  the  num- 
ber of  shares  each  may  hold.  The  ofiice  and  effect  of  the 
declaration  the  statutes  do  not  leave  in  doubt ;  when  re- 
corded, the  persons  signing  it  and  their  successors  become 
a  body  corporate  by  the  name  stated  therein  and  with 
the  powers  conferred  by  law.  It  is  an  acceptance  by  the 
corporators,  under  the  name  designated,  for  the  objects 
expressed,  of  the  corporate  powers  and  capacity  the  law 
confers,  and  a  statement  of  the  principal  constituents  of 
the  corporation  —  the  amount  of  the  capital  stock,  the 
names  of  the  stockholders  and  the  quantity  of  interest 
each  has  in  the  capital  stock.  There  is  no  authority  of 
law  for  introducing  more  into  it,  and  if  more  be  intro- 
duced it  is  mere  surplusage,  not  adding  to  or  detracting 
from  the  force  of  the  declaration.  A  controlling  purpose, 
it  may  be  supposed,  in  authorizing  or  compelling  the 
creation  of  private  corporations  under  general  laAv,  is  to 
secure  uniformity  and  equality  of  corporate  powers,  func- 
tions and  privileges;  that  all  corporations  of  the  same 
class,  formed  for  like  purposes,  should  possess  the  same 
capacities  and  properties,  and  exercise  and  enjoy  the  same 
franchises  and  privileges.  Unless  it  was  intended  to  work 
a  radical  chang-e  in  the  nature  and  character  of  these  arti- 
ficial  beings,  the  mere  creatures  of  the  law,  and  to  sub- 
vert the  whole  theory  which  has  prevailed  in  reference 
to  them,  it  cannot  have  been  contemplated  that  they 
should  for  themselves  create  powers  and  privileges  by 
declaration  or  reservation,  whether  the  declaration  or 
reservation  is  expressed  in  the  articles  of  incorporation, 
or  in  the  constitution  or  by-laws  ordained  by  the  corpora- 


6  CREATION    AND    CONSTRUCTION.  [§  3. 

tors  for  their  government.  Such  declarations  or  reserva- 
tions would  soon  become  more  liberal  and  diverse  than 
was  the  liberality  and  diversity  of  the  grants  of  corporate 
powers  by  special  legislative  enactment  —  the  evil  it  was 
intended  to  remove.  Of  every  corporation  formed  under 
the  general  law,  the  law  itself  becomes  the  charter,  de- 
fines and  enumerates  the  powers  which  are  to  be  exer- 
cised, the  nature  and  extent  of  corporate  franchises  and 
privileges.  The  declaration  of  incorporation,  the  consti- 
tution and  by-laws  adopted  by  corporate  government,  do 
not  form  the  charter  or  define  or  enumerate  the  corporate 
powers.  These  are  the  acts  of  the  corporators.  The 
charter  is  the  grant  from  the  sovereign  power  of  the 
state,  and  by  that  source  only  can  be  varied  or  enlarged. 
The  expression  in  a  declaration  of  incorporation  that  it 
is  the  intention  and  privilege  to  increase  the  capital  stock 
or  the  number  of  shares,  or  to  invest  the  corporators 
w4th  any  other  powers  not  enumerated  in  the  statute, 
whenever  deemed  proper  and  expedient,  is  vain  and  nu- 
gatory;  it  does  not  authorize  an  increase  of  capital  at  the 
mere  will  of  the  company  in  such  mode  as  it  elects.  The 
power  must  be  found  in  the  law  from  which  corporate 
existence  is  derived,  or  must  be  conferred  by  a  subsequent 
law,  the  provisions  of  which  must  be  observed  in  the  ex- 
ercise of  the  power.  The  implied  or  incidental  powers 
corporations  may  rightfully  exercise  never  have  been  ex- 
tended to  changes  in  the  constitution  or  membership  of 
the  corporate  bod}',  or  changes  of  the  purposes  for  which 
the  corporation  was  created.  They  have  been  confined 
to  such  powers  as  would  enable  the  corporation  to  exer- 
cise properly  its  express  powers."^ 

1  In  Oregon  Ry.  Co.  v.  Oregonian  Ry.  Co.,  130  U.  S.  1,  Mr.  Justice 
Miller,  in  speaking  of  the  organization  of  modern  corporations, 
said: 

"  A  corporation  in  this  country,  whatever  it  may  have  been  in 


§  4.]  CREATION    OF    CHARTERS,  T 

§  4.  What  acceptance  of  charter  implies. —  A  corpora- 
tion, as  we  have  seen,^  exists  and  exercises  its  franchises 
only  by  virtue  of  a  grant  from  the  legislative  power. 
'■'■  The  granting  and  acceptance  of  a  charter  in  the  case  of 

England  at  the  time  when  the  crown  exercised  the  right  of  creat- 
ing such  bodies,  can  only  have  an  existence  under  the  express  law 
of  the  state  or  sovereignty  by  which  it  is  ci'eated.  And  these  pow- 
ers, where  they  do  not  relate  to  municipal  corporations  exercising 
authority  conferred  solely  for  the  benefit  of  the  public,  and  in  some 
sense  parts  of  the  body  politic  of  the  state,  have  in  this  country, 
until  within  recent  years,  always  been  conferred  by  si^ecial  acts  of 
the  legislative  body  under  which  they  claim  to  exist.  But  the 
rapid  growth  of  corporations  which  have  come  to  take  a  part  in  all 
or  nearly  all  of  the  business  operations  of  the  country,  and  espe- 
cially in  enterprises  requiring  large  aggregations  of  capital  and  in- 
dividual energy,  as  well  as  their  success  in  meeting  the  needs  of  a 
vast  number  of  most  important  commercial  relations,  have  de- 
manded the  serious  attention  and  consideration  of  law  makers. 
And  while  valuable  services  have  been  rendered  to  the  public  by 
this  class  of  organizations,  which  have  stimulated  their  formation 
by  numerous  special  acts,  it  came  at  last  to  be  perceived  that  they 
were  attended  by  many  evils  in  their  operation  as  well  as  much 
good,  and  that  the  hasty  manner  in  which  they  were  created  by 
the  legislatures,  sometimes  with  exclusive  privileges,  often  without 
due  consideration  and  under  the  influence  of  improper  motives, 
frequently  led  to  bad  results." 

"  Whether  it  was  this  consideration,  or  merely  the  desire  to  fix 
some  more  universal  rule  by  which  the  rights  and  powers  of  pri- 
vate corporations,  or  those  for  pecuniary  profit,  should  come  into 
existence,  it  is  certain  that  not  many  years  ago  state  constitutions 
which  were  formed  or  remodeled  came  to  have  in  them  provisions 
for  the  formation  of  corporations  under  general  laws,  and  prohibit- 
ing such  creations  by  special  enactment." 

"  Outside  of  the  powers  conferred  and  the  privileges  granted  to 
those  organizations  by  the  statutes  under  which  they  exist,  they 
are,  in  all  the  states  of  the  Union  which  have  the  common  law  as 
the  foundation  of  their  jurisprudence,  governed  by  that  common 
law;  and  it  is  the  established  rule  of  the  federal  court,  and,  with 


IS  3. 


8  CEEATION   AND    CONSTRUCTION.  [§  5. 

private  corporations  for  pecuniary  profit  ai^  based  on  the 
thieory  that  the  prosecution  of  the  business  proposed  will 
be  .a  benefit  to  the  public,  and  that  the  investment  of 
capital  therein  will  result  in  pecuniary  profit  to  the  stock- 
holders; and  it  is  an  undertaking  on  the  part  of  the  cor- 
poration and  all  of  its  stockholders  that,  in  consideration 
of  the  grant  of  power,  the  capital  shall  be  used  for  the 
prosecution  of  the  purpose  named  in  the  charter,  and  no 
other.  There  is  also  an  undertaking  on  the  part  of  the 
corporation  with  each  stockholder  that  the  capital  he  in- 
vests shall  be  put  to  no  other  use,  and  subject  to  no  other 
hazard,  than  that  contemplated  by  the  powers  expressed 
in  the  charter,  and  that  those  things  which  are  within  the 
scope  or  objects  of  the  corporation  shall  be  done  in  the 
manner  pointed  out  in  the  charter  and  the  laws  governing 
its  action." 

§  5.  Distinction  hetween  a  natural  and  artificial  i)er- 
son. —  The  distinction  between  a  natural  person  and  one 
of  statutory  creation  —  an  artificial  person  —  maybe  said 

some  exceptions,  in  the  states  in  which  that  common  law  prevails, 
as  well  as  of  Great  Britain,  from  which  it  is  derived,  that  such  a  cor- 
poration can  exercise  no  power  or  authority  tvhich  is  not  granted  to 
it  by  the  charter  under  ivhich  it  exists  or  by  some  other  act  of  the 
legislature  which  granted  that  charter. 

"Any  authority  for  the  exercise  of  corporate  powers,  derived 
from  the  general  laws  of  a  state,  must  be  in  accordance  with  the 
constitution  of  that  state  and  its  statutes  upon  that  subject.  A 
constitutional  provision  that  corporations  shall  not  be  created  by 
special  laws,  but  may  be  formed  under  general  laws,  implies  that 
no  private  corporation  can  be  created  thereafter  until  such  general 
law  has  been  enacted,  and  that  it  thereupon  became  the  funda- 
mental law  of  the  state  in  regard  to  all  corporations  foi'med  under 
it.  It  is  idle  to  say,  therefore,  as  has  been  contended,  that  any  cor- 
poration could  assume  to  itself  powers  of  action  by  the  mere  decla- 
ration in  its  articles  or  memorandum  tliat  it  possessed  them." 

1  Lucas  V.  White  Line  Trans.  Co.,  70  Iowa,  541. 


§  6.]  CREATION    OF    CHARTERS.  9 

to  be  this:  A  natural  person  is  not  confined  in  the  exer- 
cise of  his  capacities  to  any  particular  acts  or  business, 
but  may  do  any  act  or  enter  into  any  contract  not  pro- 
hibited by  law.  An  artificial  person  may  do  no  acts  nor 
enter  into  any  contracts  except  such  as  are  authorized  by 
law;  the  one's  powers  being  inherent  whilst  the  powers 
of  the  other  are  conferred.  In  the  transaction  of  business 
enterprises  a  natural  person's  powers  are  unlimited  in  re- 
gard to  the  mode  of  their  exercise,  and  he  may  also  em- 
bark in  any  occupation  deemed  advisable  or  advantageous ; 
whilst  an  artifical  person  is  necessarily  restricted  to  the 
business  and  the  mode  of  its  exercise  prescribed  in  the 
charter  or  laws  of  its  creation.  Much  of  the  conflict  en- 
countered in  the  opinions  of  judges  and  text-writers  may 
be  directly  traced  to  a  disregard  of  this  irreconcilable  dis- 
tinction, which  no  amount  of  specious  argument  can  suc- 
cessfully overcome.  That  this  distinction  is  technical  and 
based,  in  a  measure,  on  the  fictitious  character  of  the  arti- 
ficial person  created  by  the  legislature,  in  no  wise  changes 
the  rule  of  construction  regarding  the  respective  powers 
of  each.  The  natural  person  is  born  with  inherent  pow- 
ers —  the  artificial  person  has  its  powers  to  achieve;  and, 
having  so  achieved  them  through  the  aid  of  the  law,  it  is 
entitled  to  protection  hi/  the  law  and  held  to  the  obeyance 
of  the  law. 

§  6.  Distinction  between  corporations  and  partnersliips. 
The  principles  of  the  law  upon  which  the  liability  of  cor- 
porations and  joint-stock  companies  is  founded  are  very 
clear  and  well  settled,  though  not  always  in  practice 
steadily  kept  in  view.  The  law  in  ordinary  partnerships, 
so  far  as  relates  to  the  power  of  one  partner  to  bind  the 
others,  is  a  branch  of  the  law  of  principal  and  agent.  It 
is  elementary  that  each  member  of  a  complete  partner- 


10  CKEATION    AND    CONSTRUCTION.  [§  7. 

ship  is  liable  for  himself,  and,  as  agent  for  the  rest,  binds 
them  upon  all  contracts  made  in  the  course  of  the  ordi- 
nary scope  of  the  partnership  business.  Any  restrictions 
upon  the  authority  of  each  partner  imposed  by  mutual 
agreement  among  themselves  could  not  affect  third  per- 
sons, unless  such  persons  had  notice  of  them;  then  they 
could  take  nothing  by  contract  which  those  restrictions 
forbade.  A  corporation  by  common  law  could  only  bind 
itself  by  contract  under  the  common  seal.  It  is  obvious 
that  the  law  governing  ordinary  partnerships  would  be 
inapplicable  to  a  company  consisting  of  a  great  num- 
ber of  individuals  who  contribute  to  the  common  stock. 
To  allow  each  one  to  bind  the  other  by  any  contract 
which  he  thought  fit  to  enter  into,  even  within  the  scope 
of  the  corporate  business,  would  soon  lead  to  the  utter 
ruin  of  the  contributors. 

§  7.  As  to  distinction  hetween  corporations  organized 
under  general  laws  and  special  acts. —  In  ascertaining  the 
scope  of  the  powers  of  corporations,  the  only  difference 
between  one  organized  under  general  law  and  one  created 
by  special  statute  is  that  in  the  former  the  court  will  look 
to  the  certificate  of  the  promoters  or  incorporators,  while 
in  the  latter  but  to  the  special  statute.  The  rule,  how- 
ever, in  construing  the  instrument  is  necessarily  the 
same.^  In  both  kinds  of  private  corporations  their  pow- 
ers are  such  as  are  specifically  enumerated  and  such  others 
as  are  incidental  or  necessary  to  carry  the  express  powers 
into  effect.  They  may  not  exercise  any  other  powers 
than  these.^ 

iRockhold  V.  Canton  Masonic,  etc.  Soc,  129  III.  440;  Nutt  v.  Dan- 
ville Seminai-y,  129  111.  403. 

2  Westinghouse  Machine  Co.  v.  Wilkinson,  79  Ala.  312;  North  Side 
Railway  Co.  v.  Worthington,  30  S.  W.  Rep.  1058  (Tex.,  1895);  and  see 


§   7.]  CKEATION    OF    CHARTEKS.  11 

cases  cited  in  ^  9,  post.  In  North  Side  Ry.  Co.  v.  Worthington,  supra, 
the  court,  in  discussing  the  difference  between  corporations  created 
under  general  and  special  acts,  said:  "It  occurs  to  us  that  in  deter- 
mining the  powers  of  a  corporation  a  distinction  should  be  observed 
between  such  as  are  created  by  special  charters  and  such  as  come 
into  existence  by  virtue  of  authority  conferred. by  a  general  law. 
A  charter  is  in  the  nature. of  a  contract,  and  it  may  be  that  in  con- 
struing a  special  charter  we  should  construe  it  in  the  light  of  the  spe- 
cial circumstances  attending  the  enterprise  which  was  intended  to 
be  promoted;  as,  in  case  of  a  railroad,  its  connection  with  other 
lines  of  transportation  whether  by  water  or  land,  or  its  terminus 
at  a  seaport.  The  last-mentioned  circumstance  seems  to  have  had 
a  controlling  influence  upon  the  court  in  the  case  of  Railway  Co.  v. 
Redmond,  10  C.  B.  (N.  S.)  675,  already  cited.  For  example,  if  the 
legislature  had  the  power  to  grant  and  had  granted  a  special  char- 
ter to  the  City  Company,  and  it  had  appeared  that  a  street  railway 
was  necessary  to  the  success  of  the  corporation,  and  that  this  fact 
was  known,  it  ma3'  be  the  power  to  construct  or  at  least  to  aid  the 
construction  of  the  street  railway  would  have  been  implied.  But  this 
corporation  having  been  created  under  a  general  law,  we  do  not  see 
that  it  can  claim  the  right,  by  reason  of  its  peculiar  surroundings, 
to  exercise  a  power  which  another  like  corporation  could  not  exer- 
cise by  reason  of  different  circumstances.  Our  constitution  pro- 
vides that  corporations  shall  be  created  only  by  general  laws,  and 
it  would  seem  that  one  purpose  of  the  provision  was  to  prevent  the 
legislature  from  granting  to  one  company  special  powers  or  special 
privileges.  At  all  events  the  general  law,  as  we  think,  should  be 
construed  as  a  general  rule,  conferring  upon  each  member  of  each 
particular  class  of  corporations  precisely  the  same  powers." 


12  CREATION    AND    CONSTKUCTION.  [§ 


Part  II. 

CONSTRUCTION    OF    CHARTERS. 

§  8.  General  rule  of  construction. 
9.  Corporations  have  only  powers  given  by  charter, 

10.  Rule  peculiarly  applicable  to  corporations  organized  under 

general  laws. 

11.  UUra  vires  questions  decided  by  law  of  organization. 
13.  Province  of  court  in  construing  corporate  powers. 

13.  Powers  construed  as  incidental  to  those  expressly  given. 

14.  Discretion  of  corporations. 

15.  Miscellaneous  —  Incidental  powers. 

§  8.  General  rule  of  construction. —  In  all  cases  of  leg- 
islative grants  to  private  corporations  the  well-established 
rule  of  construction  is  this :  That  grants  to  private  cor- 
porations shall  be  construed  strictly  against  the  grantees; 
and  to  prevail  they  must  be  express  and  clear  beyond  a 
doubt;  a  doubt  defeats  the  power.  What  is  not  granted 
in  clear  and  unequivocal  language  is  withheld.^  The  ob- 
ject is  to  protect  the  public  against  improvident  grants 
and  grants  made  by  implication  without  clear  intention. 
They  will  not  be  sustained  by  doubtful  words;  ambiguity 
vitiates  them.  But  this  rule  is  qualified  by  another: 
That  such  grant,  and  the  statute  making  it,  must  receive 

1  2  Dwarris  on  Stat.  750;  2  Redf.  Rys.  445,  446;  C.  &  A.  Ry.  Co.  v. 
Briggs,  2  Zabr.  (N.  J.)  623,  641,  647;  Townsend  v.  Brown,  4  Zabr. 
(N.  J.)  80,  87;  Leggett  v.  New  Jersey  Mfg.  Co.,1  N.  J.  Eq.  541;  Bridge 
Co.  V.  Land  &  Imp.  Co.,  13,  N.  J.  Eq.  81,  94;  Joint  Co.  v.  R.  &  Del- 
Bay  Ry.  Co.,  1  C.  E.  Green  (N.  J.),  321;  Morris  Canal  Co.  v.  Central 
Ry.  Co.,  16  N.  J.  Eq.  419;  Morris  &  Essex  Ry.  Co.  v.  Sussex  Ry.  Co., 

20  N.  J.  Eq.  542;  Packer  v.  Sunbury,  etc.  L.  Co.,  19  Pa.  St.  211;  Bank 
of  Penn.  'v.  Comm.,  19  Pa.  St.  144;  Penn.  Ry.  Co.  v.  Canal  Comm"rs. 

21  Pa.  St.  9;  Comm.   v.  Franklin  Canal  Co.,  21  Pa.  St.  125;  Comm. 
V.  Erie  Ry.  Co.,  27  Pa.  St.  339;  Beaty  v.  Knowler,  4  Pet.  168. 


§  9.]  CONSTRUCTION    OF    CHARTERS.  13 

a  reasonable  construction,  and  not  be  so  construed  as  to 
defeat  the  intention  of  the  legislature,  and  that  the  am- 
biguity must  be  such  as  is  not  removed  by  the  settled 
rules  of  construction.^ 

§  9.  Corporations  have  only  powers  given  &//  charter. — 

A  corporation  has,  therefore,  according  to  the  foregoing 
rule  of  construction,  no  powers  whatever  except  those 
given  by  its  charter  or  law  under  which  it  is  incorpo- 
rated, either  directly  or  as  incidental  to  its  purposes  and 
existence.-    This  rule  is  very  clearly  stated  by  Mr.  Justice 

1  Black  V.  United  Cos.,  7  C.  E.  Green  (N.  J.),  130;  S.  C,  9  C.  E. 
Green  (N.  J.),  445;  Providence  Bank  v.  Billings,  4  Pet.  (U.  S.)  514; 
Charles  River  Bridge  Co.  v.  Warren  Bridge,  11  Pet.  (U.  S.)  420;  Bank 
of  Augusta  V.  Earle,  13  Pet.  (U.  S.)  519;  Perrine  v.  dies.  &  Del. 
Ry.  Co.,  9  How.  (U.  S.)  172;  Richmond  Ry.  Co.  v.  Louisiana  Ry.  Co., 
13  How.  (U.  S.)  71;  Pennock  v.  Coe,  23  How.  (U.  S.)  117;  Rice  v. 
Railroad  Co.,  1  Black  (U.  S.),  858:  Delaware  Tax  Case,  18  Wall. 
<U.  S.)  206;  Aicardi  v.  The  State,  19  Wall.  (U.  S.)635;  Turnpike  Co.  v. 
Illinois,  6  Otto  (U.  S.),  68;  Bradley  v.  South  Carolina  Phos.  Co.,  1 
Hughes  (U.  S.),  72;  Bradley  v.  N.  Y.  etc.  Co.,  21  Conn.  294:  Boston, 
etc.  Ry.  Co.  v.  B.  &  M.  Ry.  Co.,  5  Cush.  (Mass.)  375;  Mohawk  Bridge 
Co.  V.  Utica,  etc.  Co.,  6  Paige  (N.  Y.),  554;  Auburn  Plank  Road  Co.  v. 
Douglas,  9  N.  Y.  444;  Ren.  &  Sar.  Ry.  v.  Davis.  43  X.  Y.  137;  In  re 
N.  Y.  &  N.  H.  R.  R.,  46  N.  Y.  546;  Briggs  v.  C.  &  A.  R.  R.,  2  Zab. 
(N.  J.)  623;  Wright  v.  Carter,  3  Dutch.  (N.  J.)  76;  Bridge  Prop.  v.  Ho- 
boken  Co.,  2  Beas.  (N.  J.)  81:  s.  c,  1  Wall.  116;  Packer  v.  Sunbury, 
*tc.  Ry.  Co.,  19  Pa.  St.  218;  Bank  v.  Comm.,  19  Pa.  St.  144;  Penn. 
R.  R.  V.  Canal  Comni'rs,  21  Pa.  St.  9;  St.  Clair  Co.  Turnpike  Co.  v. 
People,  82  111.  174. 

^Dartmouth  College  v.  Woodward,  4  Wheat.  (U.  S.)  636;  City 
Council  v.  Plank  Road  Co.,  31  Ala.  76:  Holland  v.  San  Francisco,  7 
Cal.  361;  Occum  Co.  v.  Sprague  Mfg.  Ca,  34  Conn.  529;  Ohio  Ins.  Co. 
V.  Nunneraacher,  15  Ind.  294;  Thompson  v.  Waters,  25  Mich.  214; 
Rochester  Ins.  Co.  v.  Martin,  13  Minn.  59;  Ruggles  v.  Collier,  43  Mo. 
353;  Downing  v.  Mt.  Washington,  etc.  Co.,  40  N.  H.  230;  People  v. 
Utica  Ins.  Co.,  15  John.  (N.  Y.)  358;  Farmers'  L.  &  T.  Co.  v.  Carroll, 
5  Barb.  (N.  Y.)  613;  White's  Bank  v.  Toledo  Ins.  Co.,  12  Ohio  St.  601; 
Lafayette  v.  Cox,  5  Ind.  38;  Green  Bay,  etc.  Ry.  Co.  v.  Union  S.  Co., 


14  CREATION    AND    CONSTKUCTION.  [§  9, 

Miller  in  Thomas  v.  BaiJroad  Co.,  101  U.  S.  Yl,  as  fol- 
lows :  "  The  powers  of  corporations  organized  under  leg- 
islative statutes  are  such,  and  such  only,  as  those  statutes- 
confer.     Conceding  the  rule  applicable  to  all  statutes, 

107  U.  S.  98;  Bank  of  Augusta  v.  Earle,  13  Pet.  (U.  S.)  519;  Miners' 
Ditch  Co.  V,  Zellerbach,  37  Cal.  543;  Vandall  v.  San  Francisco  Dock 
Co.,  40  Cal.  83;  Bellmeyer  v.  Marshalltown,  44  Iowa,  564;  Weckler 
V.  First  Nat.  Bank,  42  Md.  581;  St.  Louis  v.  Webber,  44  Mo.  547; 
Mathews  v.  Skinker,  62  Mo.  329;  Brooklin  Gravel  Road  Co.  v. 
Slaughter,  33  Ind.  185;  East  Anglian  Ry.  Co.  v.  Eastern  Counties  Ry. 
Co.,  11  C.  B.  775;  Ogdensburg,  etc.  R.  Co.  v.  Vermont,  etc.  Ry.  Co., 
63  N.  Y.  176;  Davis  v.  Old  Colony  Ry.  Co.,  131  Mass.  258;  Troy 
&  Boston  Ry.  Co.  v.  Boston,  etc.  R.  Co.,  86  N.  Y.  117;  Hinkley  v. 
Gildersleeve,  19  Grant,  Ch.  (U.  Can.)  212;  Archer  v.  Terre  Haute,  etc. 
R.  Co.,  102  111.  495;  Pearce  v.  Madison,  etc.  R.  Co.,  21  How.  (U.  S.) 
441,  and  cases  cited;  Taft  v.  Pittsford,  28  Vt.  286;  Franklin  Co.  v. 
Lewistown  Inst.,  68  Me.  43;  Rock  River  Bank  v.  Sherwood,  10  Wis. 
230;  Miner  v.  N.  Y.  etc.  R.  Co.,  53  N.  Y.  363;  Monument  Bank  v. 
Globe  Works,  101  Mass.  57;  Lafayette  Sav.  Bank  v.  St.  Louis  Stone- 
ware Co.,  4  Mo.  App.  276;  Central  Bank  v.  Empire  Stone  Co.,  26 
Barb.  (N.  Y.)  23;  Madison,  etc.  Plank  Road  Co.  v.  Watertown,  etc. 
Co.,  7  Wis.  59;  yEtna  Bank  v.  Charter  Oak  L.  Ins,  Co.,  50  Conn.  167; 
Bank  of  Genesee  v.  Patchin  Bank,  13  N.  Y.  319;  Woodruff  v,  Erie 
Ry.  Co.,  25  Hun,  246;  Chambers  v.  Falkner,  65  Ala.  448;  Wiswall  v. 
Greenville,  etc.  Co.,  3  Jones,  Eq.  (N.  C.)  183;  Toll  Bridge  Co.  v.  Os- 
born,  35  Conn.  7;  Zabrieskie  v.  Cleveland,  etc.  Co.,  23  How.  (U.  S.) 
881;  Vail  v.  Hamilton,  85  N.  Y.  453;  Rochester  Sav.  Bank  v.  Averell, 
96  N.  Y.  467;  Railroad  Co.  v.  How-ard,  7  Wall.  (U.  S.)  392;  State 
Board  v.  Citizens'  R.  Co.,  47  Ind.  407;  Low  v.  Cent.  Pac.  R.  Co.,  53 
Cal.  53;  Stewart  v.  Erie  Transp.  Co.,  17  Minn.  372;  Whittenton  Mills 
V.  Upton,  10  Gray  (Mass.),  582;  Richardson  v.  Sibley,  11  Allen  (Mass.), 
65;  Ashbury  R.  R.  Co.  v.  Riche,  7  H.  L,  653;  Stevens  v.  Rutland,  etc. 
Co.,  29  Vt.  545;  Danbury,  etc.  R.  Co.  v.  Wilson,  22  Conn.  435;  Cole- 
man V.  Eastern  Counties  Ry.  Co.,  10  Beav.  1;  Bagshaw  v.  Eastern 
Counties  Ry.  Co.,  7  Hare,  114;  McGregor  v.  Deal  &  D.  R.  Co.,  18  Q.  B. 
618;  Eastern  Counties  Ry.  Co.  v.  Hawkes,  5  H.  L.  331;  Smead  v. 
Ind.  P.  &  C.  Ry.  Co.,  11  Ind.  104;  Marietta  &  Cin.  R.  Co.  v.  Elliott, 
10  Ohio  St.  57;  Atkinson  v.  Marietta,  etc.  R.  Co.,  15  Ohio  St.  21; 
Straus  V.  Eagle  Ins.  Co.,  5  Ohio  St.  59;  Peoria  &  R.  L  R.  Co.  v.  Coal 
Valley  Co.,  68  111.  489;  Railroad  Co.  v.  Vance,  96  U.  S.  450;  Pennsyl- 
vania Co.  V.  St.  Louis  Co.,  118  U.  S.  290;  Oregon  Ry.  Co.  v.  Oregonlan 


I  9.]  CONSTRUCTION    OF    CHARTERS.  15 

that  what  is  fairly  implied  is  as  much  granted  as  what  is 
expressed,  it  remains  that  the  charter  of  a  corporation  is 
the  measure  of  its  powers,  and  that  the  enumeration  of 
these  powers  implies  the  exclusion  of  all  others."  The 
proposition  laid  down  by  the  learned  justice  in  that  case 
is  sustained  by  the  great  weight  of  authority,  both  in  this 
country  and  in  England.  The  foregoing  rule  as  to  the 
construction  of  corporate  powers  was  also  forcibly  ex- 
pressed and  upheld  by  Mr.  Justice  McCay  in  Central 
Railroad  Co.  v.  Collins,  40  Ga.  582,  in  the  following 
language :  "  Corporations  are  too  apt  to  forget  this  funda- 
mental law  of  their  being.  In  the  daily  habit  of  transact- 
ing business  in  the  name  of  the  company  as  though  it 
were  an  individual,  they  are  apt  to  slide  into  the  notion 
that  a  corporation  is  an  individual  in  all  respects,  so  far 
as  business  matters  are  concerned. 

*  "  But  a  corporation  is  a  mere  creature  of  the  law,  and 
only  exists  at  all  for  the  purposes  declared  in  its  charter, 
and  has  absolutely  no  powers  hut  those  which  the  law  con- 
fers tipon  it.  It  is  a  creature  of  the  law,  and  in  the  very 
nature  of  things  is  just  what  the  law  makes  it,  no  more, 
no  less;  and  by  the  word  'law'  here,  I  do  not  mean  the 

Ry.  Co.,  130  U.  S.  1;  Same  v.  Same,  145  U.  S.  54;  New  York,  etc.  R. 
Co.  V.  Winans,  17  How.  (U.  S.)  30;  Branch  v.  Jessup,  106  U.  S.  468; 
Salt  Lake  City  v.  HoUister,  118  U.  S.  256;  Willamette  Co.  v.  Bank 
of  British  Columbia,  119  U.  S.  191;  Pittsburg,  etc.  R.  Co.  v.  Keokuk, 
etc.  Co.,  131  U.  S.  371;  Charles  River  Bridge  v.  Warren  Bridge,  11 
Pet.  (U.  S.)  420;  Dubuque,  etc.  R.  Co.  v.  Litchfield,  23  How.  (U.  S.) 
66,  88,  89;  Slidell  v.  Grand  jean.  111  U.  S.  412;  Pickard  v.  Pullman 
Sou.  Car  Co.,  117  U.  S.  34;  Railroad  Co.  v.  Lockwood,  17  Wall.  357; 
Liverpool,  etc.  Co.  v.  Insurance  Co.,  129  U.  S.  397;  Central  Transp. 
Co.  V.  Pullman  Car  Co.,  139  U.  S.  24;  Fort  Worth  City  Co.  v.  Smith 
Bridge  Co.,  151  U.  S.  294;  Green  Bay,  etc.  Co,  v.  Union  Steamboat 
Co.,  107  U.  S.  98,  100;  Central  Ry.  Co.  v.  Collins,  40  Ga.  582;  Lucas 
V.  White  Line  Transp.  Co.,  70  Iowa,  541 ;  Westinghouse  Mach.  Co.  v. 
Wilkinson,  79  Ala.  312. 


16  CREATION    AND    CONSTRUCTION.  [§  10. 

general  law  which  regulates  the  powers  of  persons,  but 
the  act  of  incorporation,  the  charter,  the  constitution." 

§  10.  BuJe  peculiarly  ctppUccihle  to  corporations  or- 
ganized under  general  laws.—  The  rule  of  construction 
under  consideration  is  peculiarly  applicable  to  articles  of 
association  framed  under  general  laws,  which  are  a  sub- 
stitute for  a  legislative  charter,  and  which  assume  and 
define  the  powers  of  the  corporation,  without  any  super- 
vision of  the  legislature  or  of  any  public  authority.^  It 
has  been  truly  said  that "  the  frequency  of  cases  requiring 
the  construction  of  charters  excites  some  surprise,  when 
it  is  considered  that  an  act  of  incorporation  is,  and  al- 
ways must  be,  interpreted  by  a  rule  so  simple  that  no 
man,  whether  layman  or  lawyer,  can  misunderstand  or 
misapply  it.  That  which  a  corporation  is  authorized  to 
do  by  its  charter  or  act  of  incorporation  it  may  do ;  be- 
yond that,  all  its  acts  are  ultra  vires  and  illegal,  and  the 
power  must  be  given  in  plain  words  or  by  necessary  im- 
plication. All  powers  not  given  in  this  direct  and  un- 
mistakable manner  are  withheld."  ^  "  If  you  assert  that 
a  corporation  had  certain  privileges,  show  us  the  words 
of  the  legislature  conferring  them.  Failing  in  this,  you 
must  give  up  your  claims.  A  doubtful  charter  does  not 
exist ;  because  whatever  is  doubtful  is  decisively  against 
the  corporation."^ 

1  Oregon  Ry.  v.  Oregonian  Ry.,  130  U.  S.  26,  27;  Central  Trans.  Co. 
V.  Pullman  Co.,  139  U.  S.  24;  Commonwealth  v.  The  Erie,  etc.  Ry. 
Co.,  27  Pa.  St.  339. 

2  Mr.  Justice  Miller,  in  Oregon  Ry.  v.  Oregonian,  etc.  Ry.  Co.,  130 
U.  S.  26. 

3  Commonwealth  v.  The  Erie  &  N.  E.  Ry.  Co.,  27  Pa.  St.  351.  In 
the  discussion  of  this  question  the  court,  in  Morris  &  Essex  R.  R.  Co. 
V.  Sussex  Ry,  Co.,  20  N.  J.  Eq.  542,  says:  "The  act  under  which 
a  corporation  is  framed  gives  an  imperative  rule  of  construction  con- 


§  11.]  CONSTRUCTION    OF    CHARTERS.  17 

§  11.  Questions  of  ultra  vires  decided  hy  laiv  of  organ- 
ization.—  "  It  must  then  be  carefully  borne  in  mind,"  says 
Mr.  Brice,  "  that  questions  of  ultra  vires  relating  to  the 
express  powers  of  corporations  will  have  to  be  decided 

cerning  corporate  powers.  And  where  it  is  provided  in  sucli  act 
that  no  corporation  shall  possess  or  exercise  any  corporate  powers 
except  those  expressly  given  in  the  charter,  and  such  as  shall  be 
necessary  to  the  exercise  of  the  powers  so  enumerated,  its  powers 
must  be  controlled  by  that  act.  It  is  quite  apparent  from  the  lan- 
guage of  the  statutes  of  the  various  states  on  the  subject  of  corpo- 
rate powers  and  privileges  that  the  legislatures  intended  to  interdict, 
as  a  matter  of  public  policy,  the  exercise  of  any  powers  except  such 
as  are  referred  to  in  those  acts.  Whether  without  those  enactments 
the  common  law  would  fully  reach  up  to  that  measure  upon  any 
implication  that  powers  not  so  granted  or  implied  are  prohibited,  it 
is  here  unnecessary  to  consider.  The  common-law  powers  of  cor- 
porations as  ably  discussed  by  commentators  of  the  last  century  are 
not  germane  to  modern  corporations,  and  the  attempt  made  by  some 
modern  writers  to  apply  the  common-law  principles  to  statutory 
creations  tends  only  to  mislead,  and  can  serve  no  purpose  save  to 
lend  apparent  dignity  and  weight  to  an  alleged  theory  which  has  no 
foundation  in  fact.  To  determine  the  powers  of  a  corporation  under 
the  act  of  its  creation,  it  is  sufficient  that  the  terms  of  the  enact- 
ment are  plain  and  its  meaning  cannot  be  misunderstood;  and  when 
a  corporation  exercises  powers  outside  of  those  permitted  by  that 
act,  it  is  an  exercise  of  power  not  only  authorized,  but  is  against  an 
express  enactment." 

So  Mr.  Justice  Miller,  in  Oregon  Ry.  v.  Oregonian  Ry.,  130  U.  S.  1, 
says: 

"The  construction  of  corporate  powers  should  undoubtedly  be 
reasonable,  and  so  as  to  accomplish  and  not  defeat  the  purpose  and 
true  intent  of  the  charter  in  its  full  spirit  and  scope;  and  all  con- 
tracts bearing  upon  the  purposes  for  which  it  was  organized  that 
the  exigencies  of  the  business  contemplated  and  authorized  would 
reasonably  require  would  be  within  the  scope  of  the  company's 
powers.  There  are  many  reasons  not  now  iiseful  to  mention  why, 
in  justice  to  the  state,  the  public,  and  the  stockholders,  and  the  very 
stability  of  the  corporate  body,  the  legislature  should  be  jealous  of 
its  grants  of  franchises,  and  seek  to  confine  them  within  definite 
limits,  and  to  disallow  any  corporate  act  outside  of  them.  The  leg- 
3 


18  CREATION    AND    CONSTRUCTION.  [§  11, 

upon  a  consideration  of  the  exact  language  used  in  the 
law  of  its  organization,  while  such  as  concern  their  im- 
plied powers  will  be  determined  by  the  ratio  decidendi  to 
be  gathered  from  an  examination  of  numerous  conflicting 
decisions.  What  is  the  business  which  may  be  under- 
taken by  a  corporation  will  be  determined  in  each  par- 

islature  has  a  policy  in  this  matter,  and  contracts  in  contravention 
of  it  must  be  held  to  be  illegal  and  of  no  binding  obligation.  .  .  . 
It  is  to  be  remembered  that  when  a  statute  making  a  grant  of  prop- 
erty, or  of  powers  or  of  franchises,  to  private  individuals,  or  a  pri- 
vate corporation,  becomes  the  subject  of  construction  as  regards  the 
extent  of  the  grant,  the  universal  rule  is  that,  in  doubtful  points, 
the  construction  shall  be  against  the  grantees  and  in  favor  of  the 
government  or  the  general  public.  Nothing  passes  by  implication. 
Therefore  if  the  articles  of  association  of  a  corporation,  instead  of 
being  a  mere  adoption  by  the  corporators  themselves  of  the  declara- 
tion of  their  own  purposes  and  powers,  had  been  an  act  of  the  legis- 
lature conferring  such  powers  on  the  corporation,  they  would  be 
subject  to  the  rule  above  stated,  and  to  rigid  construction  in  regard 
to  the  powers  granted.  How  much  more,  then,  should  the  rule  be 
applied,  and  with  how  much  more  reason  should  a  court,  called  upon 
to  determine  the  powers  granted  by  these  articles  of  association, 
construe  them  rigidly,  with  the  stronger  leaning  in  doubtful  cases 
in  favor  of  the  public  and  against  the  private  corporation. 

"We  have  to  consider,  when  such  articles  become  the  subject  of 
construction,  that  they  are  in  a  sense  ex  parte;  their  formation  and 
extension —  what  shall  be  put  into  them  as  well  as  what  shall  be  left 
out  —  do  not  take  place  under  the  supervision  of  any  official  author- 
ity whatever.  They  are  the  production  of  private  citizens,  gotten 
up  in  the  interest  of  the  parties  who  propose  to  become  corporators, 
and  stimulated  by  their  zeal  for  the  personal  advantage  of  the  par- 
ties concerned  rather  than  the  general  good.  These  articles,  when 
signed  by  the  corporators,  acknowledged  before  any  justice  of  the 
peace  or  notary  public,  and  filed  in  the  office  of  the  secretary  of 
state  and  the  clerk  of  the  proper  county,  become  complete  and  oper- 
ative. They  are,  so  far  as  framed  in  accordance  with  law,  a  substi- 
tute for  legislation,  put  in  the  place  of  the  will  of  the  people  of  the 
state,  formerly  expressed  by  acts  of  the  legislature.  Neither  the 
officer  who  takes  such  acknowledgment,  nor  those  who  file  the  arti- 
cles, have  any  power  of  criticism  or  rejection.   The  duty  of  the  first 


§  11.]  CONSTRUCTION    OF   CHARTERS.  19 

ticular  instance  by  a  reference  to,  and  an  examination  of, 
the  powers  actually  given  to  a  corporation,  read  in  con- 
nection with  the  business  or  other  purposes  for  which  it 
has  been  instituted.  That  it  may  carry  on  such  primary 
business  is  plain  —  the  difficulty  arises  in  determining  what 

is  to  certify  to  the  fact,  and  of  the  second  to  simply  mark  them  filed 
as  public  documents,  in  their  respective  offices. 

"  These  articles,  many  of  which  have  been  heretofore  considered 
of  a  public  character,  sometimes  affecting  the  rights  of  the  public 
very  largely  and  very  seriously,  do  not  commend  themselves  to  the 
judicial  mind  as  a  class  of  instruments  requiring  or  justifying 
any  very  liberal  construction.  Where  the  question  is  whether  they 
conform  to  the  authority  given  by  statute  in  regard  to  corporate 
organizations,  it  is  always  to  be  determined  upon  just  construction 
of  the  powers  granted  them,  with  a  due  regard  for  all  the  other  laws 
of  the  state  upon  that  subject,  and  the  rule  stated  above. 

"  Another  important  consideration  to  be  observed,  peculiarly  ap. 
plicable  to  the  acts  of  corporations  formed  by  the  corporators  them- 
selves, declaring  what  business  they  are  about  to  pursue,  and  the 
powers  which  they  purpose  to  exercise  in  carrying  it  on,  is,  that 
while  the  thing  to  be  done  may  be  lawful  in  a  general  way,  there 
are  and  must  be  limitations  upon  the  means  by  which  it  is  to  be 
done  or  the  purpose  carried  out,  which  the  articles  of  incorporation 
cannot  remove  or  violate.  A  company  might  be  authorized  by  its 
articles  to  establish  a  large  manufactory  in  a  particular  locality,  and 
might  be  held  to  be  a  valid  corporation  with  sufficient  powers  to 
prosecute  the  business  described;  but  such  articles,  although  men- 
tioning the  particular  place,  would  not  empower  the  company,  in 
the  exercise  of  the  powers  thus  conferred,  to  carry  on  a  business  in- 
jurious to  the  health  or  comfort  of  those  living  in  that  vicinity. 

"  Instances  might  be  multiplied  in  which  powers  described  in  gen- 
eral terms  as  belonging  to  the  objects  of  the  parties  who  thus  became 
incorporated  would  be  valid;  but  the  corporation  carrying  out  this 
general  purpose  would  not  be  authorized  to  exercise  the  powers  nec- 
essary for  so  doing  in  any  mode  which  the  law  of  the  state  would 
not  justify  in  any  private  person  or  any  unincorporated  body.  The 
manner  in  which  these  powers  shall  be  exercised,  and  their  subjec- 
tion to  the  restraint  of  the  general  laws  of  the  state  and  its  general 
principles  of  public  policy,  are  not  in  any  sense  enlarged  by  inserting 
in  the  articles  of  association  the  authority  to  depart  therefrom." 


20  CREATION    AND    CONSTRUCTION.  [§  12. 

other  secondary  matter,  incidental  to  such  primary  busi- 
ness and  necessary  for  the  commodious  and  prolific  car- 
rying on  and  development  of  the  same,  are  within  the 
scope  of  its  powers."  ^ 

§12.  Province  of  courts  in  construing  cor})orate  2)oiv- 
^rs. —  Powers  manifestly  doubtful  should  never  be  recog- 
nized by  judicial  construction.  If  not  given  by  plain 
words  or  by  necessary  implication,  it  should  be  declared 
not  to  exist.^  N'or  is  it  the  province  of  the  court  to  enlarge 
the  powers  of  a  corporation  beyond  the  limitations  of  the 
charter  because  circumstances  have  changed.  The  court's 
province  is  to  expound  the  law  as  it  stands,  not  to  deter- 
mine whether  larger  powers  would  not  have  been  given 
if  the  legislature  had  anticipated  events  which  have  since 
happened.^  It  is  not  sufficient  that  the  officers  or  a  ma- 
jority of  the  stockholders  of  a  private  corporation  believe 
its  interests  may  be  advanced  by  the  exercise  of  additional 
powers.*  What  the  state  has  not  given  to  it  can  only  be 
obtained  by  virtue  of  legislative  enactment.^  The  exer- 
cise of  corporate  franchises,  being  restrictive  of  individual 
rights,  cannot  be  extended  beyond  the  letter  and  spirit  of 
the  act  of  incorporation.^     And  the  specifi.c  grant  of  cer- 

1  Green's  Brice's  Ultra  Vires,  ch.  Ill,  p.  64 

2  Bank  of  Pennsylvania  v.  Coram.,  19  Pa.  St.  144;  Pennsylvania  R. 
Co.  V.  Canal  Comm'rs,  21  Pa.  St.  9;  Coram,  v.  Franklin  Canal  Co.,  21 
Pa.  St.  117;  Coram,  v.  Erie  Ry.  Co.,  27  Pa.  St.  339;  Spohn  v.  Farmers' 
Bank,  13  Norris  (Pa.),  433. 

3  Perrine  v.  Ches.  &  Del.  Canal  Co.,  9  How.  (U.  S.)  172. 

estate  V.  Standard  Oil  Co.,  49  Ohio  St.  137;  Beaty  v.  Knowler,  4 
Pet.  (U.  S.)  152.  168. 

sStowe  V.  Flagg,  72  IlL  397;  Hadley  v.  Commissioners,  105  Mass. 
526:  Franklin  Bridge  Co.  v.  Wood,  14  Ga.  80. 

s  Oregon  Ry.  v.  Oregonian  Ry.,  130  U.  S.  1;  Central  Trans.  Co.  v. 
Pullman  Palace  Car  Co.,  138  U.  S.  54;  Beaty  v.  Knowler,  4  Pet.  (U.  S.) 
152. 


§  13.]  CONSTRUCTION    OF    CHAETEKS.  21 

tain  powers  in  a  charter  is  an  implied  prohibition  of 
other  and  distinct  powers.^ 

§  13.  Powers  construed  as  incidental  to  those  exjyressly 
given. —  The  powers  of  a  corporation  are,  strictly  speak- 
ing, twofold :  those  that  are  derived  from  express  grant, 
and  those  that  are  incident  and  necessarily  appertain  to 
it,  whether  expressed  in  the  grant  or  not.^  An  incidental 
power  is  one  that  is  directly  and  incidentally  appropriate 
to  the  execution  of  the  specific  grant,  and  not  one  that 
has  a  slight  or  remote  relation  to  it.*  For  example,  the 
power  to  make  by-laws,  to  make  and  use  a  common  seal, 
and  the  right  to  sue,  are  incident  to  every  corporation.* 
In  modern  times  it  has  been  usual  to  embrace  all  these 
incidental  powers  in  the  act  of  incorporation,  so  that  it 
may  now  be  considered  the  general  rule  that  the  powers 
of  a  corporation  are  regulated  and  defined  by  the  act 
which  gives  it  existence.  It  has  been  a  matter  of  much 
doubt  and  misapprehension  as  to  whether  the  power  to 
borrow  money,  to  make  bills  and  notes  and  other  similar 
contracts  are  powers  incident  to  a  corporation.  These 
and  other  powers,  usually  deemed  incidental  powers  of 
corporations,  will  be  hereafter  considered.  Whatever 
may  be  the  incidental  or  implied  powers  of  aggregate 
corporations  by  the  common  law,  and  the  modes  by  which 
those  powers  are  to  be  carried  into  operation,  corpora- 
tions created  by  statute  must  depend  both  for  their  pow- 
ers and  the  mode  of  exercising  them  upon  the  true  con- 
struction of  the  statute  itself.^ 

1  People  V.  Utica  Ins.  Co.,  15  Johns.  358;  New  York  Ins.  Co.  v.  Ely, 
2  Cow.  (N.  Y.)  678. 

2  See  cases  cited  to  §  9. 

SHood  V.  N.  Y.  Ry.  Co.,  22  Conn.  1;  Buffet  v.  Troy,  etc.  R.  Co.,  40 
N.  Y.  168;  Curtis  v.  Leavitt.  15  N.  Y.  9. 

4Leggett  V.  The  N.  J.  Mfg.  Co.,  1  N.  J.  Eq.  541. 

5  Bank  of  United  States  v.  Dandridge,  13  Wheat.  (U.  S.)  64. 


22  CREATION    AND    CONSTRUCTION.  [§§  14,  15. 

§  14.  Discretion  of  corporation  in  exercise  of  powers. — 
Where  a  power  is  conferred  by  charter  and  the  mode  of 
exercising  prescribed,  the  provisions  are  said  to  be  de- 
pendent; but  where  a  grant  of  power  is  clearly  defined 
and  no  mode  prescribed  for  its  exercise,  it  is  for  the  cor- 
poration to  adopt  such  mode  as  in  its  judgment  will  secure 
the  purpose  contemplated.^  On  questions  as  to  dealing 
in  a  corporate  capacity  with  third  persons,  companies 
must  be  limited  by  their  respective  charters;  but  on  those 
relating  to  the  mere  manner  of  getting  into  operation  — 
of  becoming  prepared  to  act  —  a  liberal  construction  is  to 
be  adopted.-  But  when  an  act  of  incorporation  prescribes 
the  mode  in  which  a  power  given  by  the  charter  shall  be 
executed,  the  corporation  can  execute  it  in  no  other  mode.^ 
A  corporation,  however,  has  a  reasonable  discretion  in 
the  selection  of  any  of  the  means  usual  or  proper  at  the 
time  or  place,  or  in  the  view  of  the  circumstances,  to  ac- 
complish the  object  of  its  incorporation.*  Although  a 
corporation  may  not  transact  business  other  than  that  for 
which  it  was  chartered,  yet  it  should  be  made  clearly  to 
appear  that  an  act  or  contract  was  not  within  its  powers 
before  a  court  will  so  decide  it.* 

'§  15.  Miscellaneous  incidental  potvers. —  A  corporation 
cannot  be  a  trustee  for  purposes  foreign  to  its  institution,^ 
ITor  can  it  exercise  the  power  of  creating  perpetuities, 
unless  that  right  be  expressly  granted.''     A  corporation 

1  Holland  v.  San  Francisco,  7  Cal.  361;  Southern  Life  Ins.  Co.  v. 
Lanier,  5  Fla.  110. 

2  Judali  V.  American  Live  Stock  Ins.  Co.,  4  Ind.  333. 

3  Farmers'  L.  &  T.  Co.  v.  Carroll,  5  Barb.  (N.  Y.)  613. 

4  Clark  V.  Farrington,  11  Wis.  306. 

5  Dana  v.  Bank  of  St.  Paul,  4  Minn.  385. 

6  Trustees  v.  Peaslee,  15  N.  H.  317;  Jackson  v.  Hartwell,  8  Johns. 
422. 

7  Cotter  V.  Doty,  5  Ohio,  393. 


§  15.]  CONSTEUCTION    OF   CHAKTER8.  23 

may  not,  by  resolution  or  otherwise,  donate  its  property 
to  a  new  corporation,^  nor  grant  away  its  rights  and 
franchises  which  are  necessary  to  the  existence  and 
maintenance  of  the  object  for  which  it  was  created.-  But 
corporations  authorized  by  charter  to  contract  in  a  pre- 
scribed mode  may,  nevertheless,  by  practice  render  them- 
selves liable  on  instruments  in  a  different  mode.^ 

1  Polar  Star  Lodge  v.  Polar  Star  Lodge,  16  La.  Ann.  53. 

2  Canal  Co.  v.  Borhara,  9  Watts  &  S.  (Penn.)  27.    And  see  cases 
cited  in  note  to  §  137,  post. 

swittee  v.  Derby  Fishing  Co.,  2  Conn.  260. 


CHAPTER  II. 

THE  DOCTRINE  OF  ULTRA  VIRES. 

THE    DOCTRINE    GENERALLY. 

16.  Introductory, 

17.  Ultra  vires  —  Senses  in  which  used. 

18.  Principles  of  doctrine  plain. 

19.  Two  propositions  of  doctrine  settled. 

20.  Chronological  review  of  doctrine. 

21.  Head  v.  Providence  Ins.  Co. 
23.  People  v.  Utica  Ins.  Co. 

23.  New  York  Firemen  Ins.  Co.  v.  Sturges. 

24.  Bank  of  United  States  v.  Dandridge. 

25.  Beach  v.  Fulton  Bank. 

26.  Bank  of  Augusta  v.  Earle. 

27.  Barry  v.  Merchants'  Exchange. 

28.  Perrine  v.  Chesapeake,  etc.  Canal  Co. 

29.  Hood  V.  New  York,  etc.  R.  Co. 

30.  Pearce  v.  Madison,  etc.  R.  Co. 
81.  Bissell  V.  Michigan,  etc.  R.  Co. 

32.  Monument  National  Bank  v.  Globe  Works. 

33.  Miners'  Ditch  Co.  v.  Zellerbach. 

34:.  Franklin  Co.  v.  Lewiston  Institution. 

35.  Thomas  v.  Railroad  Co. 

36.  Davis  v.  Old  Colony  R.  Co. 

37.  Central  Transp.  Co.  v.  Pullman  Co. 

38.  Lucas  v.  The  White  Line  Transp.  Co. 

39.  The  doctrine  as  construed  by  English  courts  —  Colman 

v.  Eastern  Counties  Ry.  Co. 

40.  East  Anglian  Co.  v.  Eastern  Counties  Ry.  Co. 

41.  Ashbury  Co.  v.  Riche. 

42.  Attorney-General  v.  The  Great  Eastern  Ry.  Co. 

43.  Small  et  al.  v.  Smith  et  al. 

44.  Baroness  Wenlock  v.  The  River  Dee. 

45.  Trevor  v.  Whit  worth  et  al. 


§  16,]  THE    DOCTRINE    GENERALLY.  25 

§  16.  Introductory. —  It  has  been  amply  demonstrated 
that  in  financial  and  commercial  circles  as  in  the  animal 
kingdom,  the  law  of  natural  selection  dominates  the 
world  —  the  weak  succumb  to  the  strong  —  the  fight  is 
to  the  most  powerful.  That  aggressive  element  to  be 
found  in  human  nature,  which  sometimes  prompts  man- 
kind to  shape  his  end  regardless  of  the  rights  of  his  fellow- 
men,  has  caused  the  enactment  of  wholesome  laws  to  re- 
strain this  innate  tendency  of  the  desire  of  gain  within 
the  bounds  of  reason  and  justice,  and  to  protect  those 
who  by  nature  and  circumstance  are  unable  to  success- 
fully defend  their  just  and  legal  rights  against  the  v,^anton 
assaults  of  an  abnormal  greed,  or  the  unavoidable  conse- 
quences of  a  superior  natural  sagacity.  For  the  purpose, 
then,  of  securing  to  all  men  equal  rights  before  the  law, 
impartial  tribunals  have  been  established,  endowed  with 
authority  to  determine  the  rights,  and  power  to  redress 
the  wrongs,  of  every  citizen,  and  to  uphold  the  dignity  of 
and  command  respect  for  the  legislative  departments  of 
government.  This  inordinate  greed,  fed,  fattened  and 
intensified  by  growing  success,  finds  a  fitting  embodiment 
and  is  strikingly  magnified  in  the  management  and  work- 
ings of  our  modern  corporations.  These  public-spirited 
associations,  though  often  alleged  to  be  soulless,  have 
proved  themselves  not  to  be  altogether  sightless,  for  they 
have  readily  seen  and  promptly  taken  advantage  of  every 
opportunity  which  a  combination  of  capital,  skill  and  in- 
dustry has  afforded,  to  strengthen  their  advantageous 
positions  and  to  increase  their  doubtful  possessions.  This 
unbridled  pruriency  for  illegitimate  commercial  procrea- 
tion, stimulated  by  successful  efforts  in  the  aggregation 
of  wealth  and  power  at  the  expense  of  the  public  weal^ 
has  led  corporations  to  overstep  the  boundaries  designated 
in  their  charters  withic  which  they  are  to  confine  their 


26  THE    DOCTKINE    GENERALLY.  [§  17. 

acts  and  undertakings,  and  to  enter  upon  the  private  pre- 
serves reserved  for  individual  industry.  To  this  tendency 
of  corporations  to  attempt  the  exercise  of  unauthorized 
powers,  and  to  usurp  privileges  which  have  not  been 
granted  them,  must  be  attributed  the  evolution  by  the 
courts  of  the  wholesome  doctrine  of  ultra  vi?'es. 

§  IT.  Ultra  vires  —  Senses  in  which  term  is  used. —  Few 
subjects  have  elicited  more  discussion  or  excited  more 
general  interest  in  the  profession  than  that  disturbing 
element  in  the  law  of  corporations  known  as  the  "  Doc- 
trine of  Ultra  Vires.''^  The  term  "  ultra  vires "  is  the 
modern  legal  nomenclature  for  acts  of  a  corporation  which 
exceed  or  are  beyond  the  powers  conferred  by  law  upon 
the  legal  entity,  acting  through  any  of  its  instrumentali- 
ties.^ The  expression  "  ultra  vires  "  has  been  used  in  dif- 
ferent senses,  to  express  either  that  the  act  of  the  directors 
or  officers  is  in  excess  of  their  authority  as  agents  of  the 
corporation,  or  that  the  act  of  the  majority  of  the  stock- 
holders is  in  violation  of  the  rights  of  the  minority,  or 
that  the  act  has  not  been  done  in  conformity  with  the  re- 
quirements of  the  charter,  or  the  act  is  one  which  the 
corporation  itself  has  not  the  capacity  to  do,  as  being  in 
excess  of  the  corporate  powers.  This  subject  has  been 
discussed  both  by  the  courts  of  this  country  and  England 
in  an  able  and  exhaustive  manner.  For  a  time  there  was 
an  element  of  uncertainty  appearing  in  the  views  ex- 
pressed by  the  courts,  as  to  whether  or  not  the  doctrine 
should  be  applied  only  to  the  acts  of  a  corporation,  as 
such,  or  whether  it  should  not  also  be  applied  to  acts  of 
the  directors  or  officers  which  were  in  excess  of  the  au- 
thority given  them  in  the  management  of  the  internal 
affairs  of  the  company.     In  the  former  sense  only  is  the 

1  Pomeroy's  Spec.  Perf.,  §  56. 


§  17.]  THE    DOCTRINE    GENERALLY.  27 

doctrine  legitimately  applicable.  This  rather  ambiguous 
conception  of  the  doctrine  led  the  courts  into  many  ave- 
nues of  technical  reasoning,  and  precipitated  discussions 
of  the  principles  of  the  law  governing  the  relations  of 
principal  and  agent,  of  trustee  and  cestui  que  trust,  and 
principles  governing  other  questions  of  like  nature,  which 
do  not  properl}''  belong  to  the  doctrine  in  its  application 
to  chartered  corporations.  As  was  said  by  a  learned 
judge  in  the  case  of  Camden,  etc.  R.  Co.  v.  May's  Land- 
ing, etc.  Co.,  48  N.  J.  L.  530:  "The  indiscriminate 
use  of  this  expression  with  respect  to  cases  different 
in  their  nature  and  principles  has  led  to  considerable 
•confusion,  if  not  misapprehension.  Where  an  act  done 
by  directors  or  officers  is  simply  beyond  the  powers 
•of  the  executive  department  of  the  corporation — the 
agency  by  which  the  corporation  exercises  its  functions  — 
<ind  not  of  the  corporation  itself,  it  may  be  made  valid 
and  binding  by  the  action  of  the  board  of  directors,  or 
by  the  approval  of  the  stockholders.  Where  the  act  done 
by  the  directors  is  not  in  excess  of  the  powers  of  the  cor- 
poration itself,  but  is  simply  an  infringement  upon  the 
rights  of  the  stockholders,  it  may  be  made  binding  upon 
the  latter  by  ratification,  or  by  consent  implied  by  acqui- 
escence. Where  the  infirmity  of  the  act  does  not  consist 
in  a  want  of  corporate  power  to  do  it,  but  in  the  disre- 
gard of  formalities  prescribed,  it  may  or  may  not  be  valid 
as  to  third  persons  dealing  hona  fide  with  the  corporation, 
according  to  the  nature  of  the  formality  not  observed,  or 
the  consequences  the  legislature  has  imposed  upon  non- 
observance.  These  are  all  cases  depending  upon  legal 
principles  not  peculiarly  applicable  to  corporations,  and 
the  use  of  the  phrase  '  ultra  vires''  tends  to  confusion  and 
misapprehension.     In  its  legitimate   use  the  expressioa 


28  THE    DOCTRINE    GENERALLY.  [§§  IS,  19. 

'■ultra  vires''  should  be  applied  only  to  sncli  acts  as  are  be- 
yond the  powers  of  the  corporation  itself."  ^ 

§18.  Principles  of  the  doctrine  plain. —  The  principles 
upon  which  the  doctrine  of  ultra  vires  is  predicated  are 
apparently  simple  and  elementary,  being  plain  even  to  a 
Avayfarer;  yet,  in  construing  corporate  powers  and  duties 
under  charters  and  statutory  enactments,  much  doubt 
and  no  little  confusion  has  certainly  arisen.  This  uncer- 
tainty and  confusion,  however,  has  not  arisen,  it  is  re- 
spectfully submitted,  by  reason  of  any  misapprehension 
of  the  correct  construction  which  should  be  placed  upon 
this  doctrine,  but  rather  from  a  growing  tendency  of  the 
courts  of  this  country  —  a  spreading  of  the  granger  ele- 
ment in  our  state  courts  —  to  disregard  purely  legal 
rights  and  the  rules  of  law  controlling  them,  unwisely 
tempering  their  questionable  judgments  with  even  more- 
questionable  and  unstrained  mercy,  and  basing  their  find- 
ings upon  the  equitable  rights  of  the  parties,  whatever 
may  be  the  cause  of  action,  as  they  appear  to  the  partic- 
ular court  having  jurisdiction  of  the  subject-matter;  the 
application  of  the  doctrine  being  dependent,  in  a  great 
measure,  upon  the  temperament  and  discretion  of  the 
judge  before  whom  the  defense  of  tiltra  vires  is  urged. 
While  this  manner  of  adjusting  legal  complications  may 
be  commendable  in  a  certain  sense,  it  cannot  be  regarded 
as  judicial  Avisdom  by  those  who  desire  the  fountains  of 
legal  jurisprudence  maintained  in  all  their  pristine  purity 
and  vigor,  undefiled  by  the  wanton  influence  of  class 
prejudice,  or  the  natural  flow  thereof  diverged  by  the 
misguided  inspiration  of  political  zeal. 

§  19.  Tii'o  propositions  as  to  the  doctrine  settled. —  It 
has  been  well  said  by  a  learned  justice  that  "  the  doc- 

1  Depue,  J.,  dissenting. 


§  19.]  THE    DOCTRINE    GENERALLY.  29 

trine  of  ultra  m7'es  has  been  thoroughly  sifted  within  the 
last  thirty  years  —  its  extent  and  limitations  clearly  de- 
fined. Two  ^propositions  are  settled.  One  is  that  a  con- 
tract by  which  a  corporation  disables  itself  from  perform- 
ing its  functions  and  duties  undertaken  and  imposed  by 
its  charter  is,  unless  the  state  which  created  it  consents, 
ultra  vires.  A  charter  not  only  grants  rights;  it  also  im- 
poses duties.  An  acceptance  of  those  rights  is  an  as- 
sumption of  those  duties.  As  it  is  a  contract  which  binds 
the  state  not  to  interfere  with  those  rights,  so,  likewise, 
it  is  one  which  binds  the  corporation  not  to  abandon  the 
■discharge  of  those  duties.  It  is  not  like  a  deed  or  patent, 
which  vests  in  the  grantee  or  patentee  not  only  title  but 
full  power  of  alienation,  but  it  is  more  —  it  is  a  contract 
^vhose  obligations  neither  party,  state  nor  corporation, 
can,  without  the  consent  of  the  other,  abandon.  The 
other  is  that  the  powers  of  a  corporation  are  such,  and 
such  only,  as  the  charter  confers;  and  an  act  beyond  the 
measure  of  those  powers,  as  either  expressly  stated  or 
fairly  implied,  is  ultra  vires.  A  corporation  has  no  nat- 
ural or  inherent  rights  or  capacities.  Created  by  the 
state,  it  has  such  powers  as  the  state  has  seen  fit  to  give 
it  —  only  this  and  nothing  more.  And  so  w^  hen  it  as- 
sumes to  do  that  which  it  has  not  been  empowered  by 
the  state  to  do,  its  assumption  of  powers  is  void,  the  act 
is  a  nullity ;  the  contract  is  ultra  vires.  These  two  prop- 
ositions embrace  the  whole  doctrine  of  ultra  vires.  They 
are  its  alpha  and  omega."  ^  Were  the  two  foregoing 
propositions  steadily  kept  in  view  by  the  courts  in  apply- 
ing this  doctrine,  the  diversity  of  judicial  opinion  on  this 
subject  would  be  much  less. 

1  Brewer,  J.,  in  Chicago,  R.  L  &  P.  R.  Co.  v.  Union  Pac.  Ry.  Co.,  47 
Fed.  Rep.  15. 


30  THE    DOCTRINE    GENERALLY.  [§§  20,  21. 

§20.  Chronological  review  of  the  doctrine.  —  Before 
proceeding  in  detail  to  a])ply  the  doctrine  of  ^dtra  vires- 
to  the  different  phases  of  corporate  contracts  and  liabil- 
ities, and  that  the  scope  and  effect  of  the  same  may  the 
better  be  understood,  it  is  deemed  advisable  to  first  give 
a  brief  chronological  review  of  its  advent  and  progress 
in  the  adjudications  of  the  courts  of  this  country  and 
England.  To  this  end  the  more  leading  cases  where  the 
doctrine  has  been  discussed  and  applied  will  be  consid- 
ered. 

§  21.  Head  v.  Providence  Ins.  Co.,  3  Cranc/i,  127 
{180 Jf).  —  The  principles  Avhich  support  the  defense  of 
ultra  vires  to  unauthorized  acts  of  corporations  were  first 
enunciated  in  this  country  by  the  supreme  court  of  the 
United  States  in  1804,  when,  in  the  case  of  Head  v. 
Providence  Ins.  Co.,  Chief  Justice  Marshall,  in  discussing 
the  source  of  corporate  powers,  expressed  the  views  still 
held  by  that  court.  In  that  case  an  action  was  brought 
on  two  policies  of  insurance  placed  on  merchandise  on 
board  Spanish  brigs  afterwards  lost  and  destroyed.  The 
learned  justice  there  said;  "Without  ascribing  to  this 
body,  which,  in  its  corporate  capacity,  is  the  mere  crea- 
ture of  the  act  to  which  it  owes  its  corporate  existence,, 
all  the  qualities  and  disabilities  annexed  by  the  common 
law  to  the  ancient  institutions  of  this  sort,  it  may  cor- 
rectly be  said  to  be  precisely  what  the  incorporating  act 
has  made  it,  to  derive  all  its  powers  from  that  act  and 
be  capable  of  exercising  its  faculties  only  in  the  manner 
which  that  act  authorizes.  With  these  bodies  which  have 
only  a  legal  existence,  the  act  of  incorporation  is  an  en- 
abling act.  It  gives  them  all  the  powers  they  possess. 
It  enables  them  to  contract;  and  when  it  prescribes  to 
them  a  mode  of  contracting,  they  must  observe  that 


§§  22,  23.]  THE    DOCTKINE    GENERALLY.  31 

mode,  or  the  instrument  no  more  creates  a  contract  than 
if  the  body  had  never  been  incorporated."  Upon  the 
principles  enunciated  in  this  case  rested  the  decisions  of 
the  Dartinouth  College  Case^  4  "Wheat.  518;  Gozzler  v. 
Corporation  of  Georgetoivn,  6  Wheat.  593;  Fleckner  v. 
Bank  of  United  States,  8  "Wheat.  338,  and  many  others 
at  a  later  day. 

§  22.  FeopU  V.  Utlca  Bis.  Co.,  15  John.  357  {1818).— 
That  was  a  suit  on  information  in  the  nature  of  quo  war- 
ranto filed  by  the  attorney-general  against  the  defendant 
for  exercising  banking  privileges  without  authority  from 
the  legislature,  and  judgment  of  ouster  was  rendered 
against- the  company.  The  court  there  said:  "It  was, 
however,  contended  on  the  argument  that  the  right  of 
carrying  on  banking  operations  was  necessarily  incident 
to  the  corporation,  because  not  expressly  prohibited,  if 
they  had  surplus  funds  which  they  could  spare  for  that 
purpose.  But  I  cannot  assent  to  this  rule  of  construing 
a  charter  of  incorporation  for  a  specific  object.  Such  an 
incorporated  company  have  no  rights  except  such  as  are 
specially  granted  and  those  that  are  necessary  to  carry 
into  effect  the  purposes  for  which  it  was  established. 
The  specification  of  certain  powers  operates  as  a  restraint 
to  such  objects  only,  and  is  an  implied  prohibition  of  the 
exercise  of  other  and  distinct  powers.  A  contrary  doc- 
trine would  be  productive  of  mischievous  consequences, 
especially  with  us,  where  charter  privileges  have  been  so 
alarmingly  multiplied." 

§  23.  New  York  Firemen  Ins.  Co.  v.  Sturges,  2  Cow. 
66Jf.  [182]^). —  This  was  assumpsit  against  second  indorsers 
on  a  promissory  note,  defendant  company  being  one  of 
the  indorsers.     In  affirming  the  principle  that  corpora- 


32  THE    DOCTRINE    GENERALLY.  [§§  2-i-26. 

tions  have  no  powers  except  such  as  are  specially  granted 
and  those  necessary  to  effect  the  powers  so  granted, 
it  was  held  that  a  corporation  having  no  power  by  the 
act  of  incorporation  to  discount  notes,  but  created  for 
the  purpose  of  insurance,  has  no  right  to  carry  on  the 
business  of  discounting. 

§  24.  Bank  of  United  States  v.  Dandridge,  I'B  Wheat. 
6Jf.  {1827). —  This  was  an  action  by  the  president,  directors 
and  company  of  the  Bank  of  the  United  States  upon  a 
bond  given  to  the  bank  to  secure  the  faithful  perform- 
ance of  the  official  duties  of  one  of  its  cashiers.  It  was 
held  that  where  a  cashier  is  duly  appointed,  and  permit- 
ted to  act  in  his  office  for  along  time,  under  the  sanction 
of  the  directors,  it  is  not  necessary  that  his  official  bond 
should  be  accepted  by  the  board  of  directors  as  satisfac- 
tor}'-,  according  to  the  terms  of  the  charter,  in  order  to 
enable  him  to  enter  legally  upon  the  duties  of  his  ottice, 
or  to  make  his  sureties  responsible  for  the  non-perform- 
ance of  those  duties. 

§  25.  Beacli  v.  Fulton  Bank,  3  Wend.  57  1^  {18'29).—  \\i 
this  case  it  was  held  that  a  contract  for  the  loan  of  money 
made  with  an  incorporated  company,  as  well  as  the  se- 
curity taken  on  such  loan,  is  void,  if  the  power  to  loan 
money  is  not  expressly  given,  or  necessarily  incident  to 
the  powers  granted  to  such  company  by  its  charter. 

§  26.  Banli  of  Am/usta  v.  Earle,  13  Pet.  519  {1839).— 
This  was  an  action  in  the  circuit  court  of  the  United 
States  for  the  district  of  Alabama  by  the  Bank  of  Au- 
gusta against  the  defendant,  a  citizen  of  Alabama,  on  a 
bill  of  exchange  drawn  at  Mobile,  Alabama,  on  New  York, 
which  had  been  protested  for  non-payment  and  returned 
to  Mobile;  the  bill  was  made  and  indorsed  for  the  pur- 


§  27.]  THE   DOCTKINE    GENEEALLT.  33 

pose  of  being  discounted  by  the  agent  of  the  bank,  who 
had  funds  in  his  hands  belonging  to  the  plaintiff  for  the 
purpose  of  purchasing  bills  of  exchange ;  the  bill  was  dis- 
counted by  the  agent  of  the  bank  in  Mobile  for  the  bene- 
fit of  the  bank,  with  their  funds.  The  question  was  as 
to  the  power  of  the  bank  to  discount  bills  of  exchange, 
and  discussed  the  distinction  between  discounting  and 
purchasing,  and  is  a  leading  case  on  that  subject. 

§  27.  Barry  v.  Merchants^  Exchange,  1  Srnidf.  Ch.  S80 
(184-4-)' — The  Merchants'  Exchange  was  a  corporation 
created  with  the  power  to  purchase,  hold  and  convey 
real  estate,  and  to  erect  and  build  such  an  edifice  or  build- 
ing as  it  might  deem  necessary  or  proper  for  the  pur- 
poses of  a  public  exchange  in  the  city  of  ISTew  York. 
The  question  in  this  case  was  as  to  whether  the  corpora- 
tion had  power  to  borrow  money  in  order  to  erect  such 
a  building,  and  to  secure  the  repayment  of  the  same  by 
issuing  bonds  and  by  mortgaging  its  real  estate.  It  was 
held  that  it  had,  the  assistant  vice-chancellor,  who  deliv- 
ered the  opinion  of  the  court,  saying:  ""While  I  have  the 
honor  of  holding  a  seat  in  this  tribunal  I  trust  that  no 
case  of  hardship,  no  argument  founded  upon  broken  faith, 
will  influence  me  to  treat  any  corporation  (or  persons 
participating  with  it)  which  has  usurped  powers  not  del- 
egated to  it  or  infringed  any  of  its  privileges  with  an  in- 
dulgence inconsistent  with  the  express  injunctions  of  the 
law. 

"  Corporate  privileges  are  generally  obtained  with  a 
view  to  private  interests,  and  they  are  ostensibly  con- 
ferred to  prosecute  some  single  enterprise  or  to  pursue 
some  one  separate  or  distinct  branch  of  business.  The 
innate  tendency  of  the  desire  of  gain,  acting  in  these  in- 
3 


34  THE   DOCTRINE   GENERALLY.  [§§  28,  29. 

stitutions  upon  a  restricted  francliise,  is  to  enlarge  the 
authority  granted,  and  this  leads  to  usurpation. 

"  The  legislature  of  the  several  states  has  inundated 
the  country  with  an  infinity  of  corporations,  created  for 
almost  every  business  and  purpose  known  to  a  highly 
civilized  and  eminently  commercial  people,  and  I  am 
fully  satisfied  that  the  interests  of  the  public,  as  well  as 
their  own,  will  best  be  promoted  by  holding  them  to  a 
strict  accountability." 

§  28.  Perrine  v.  Cliesajyeake  Sc  Delmvare  Canal  Co.,  9 
How.  172  {1850). —  In  this  case  it  was  held  that  where  the 
charter  of  a  corporation  having  provided  for  the  payment 
of  a  certain  toll  by  vessels  not  having  merchandise  on 
board,  such  vessel  could  not  be  excluded  from  the  canal 
because  they  carried  passengers;  and  not  having  been 
empowered  by  its  charter  to  demand  tolls  on  passengers, 
or  on  vessels  by  reason  of  their  passengers,  cannot  exact 
such  tolls.  It  is  there  said  by  Chief  Justice  Taney,  who 
delivered  the  opinion  of  the  court :  "  ]N[ow  it  is  the  well- 
settled  doctrine  of  this  court  that  a  corporation  created 
by  statute  is  a  mere  creature  of  the  law,  and  can  exercise 
no  powers  except  those  which  the  law  confers  upon  it  or 
which  are  incident  to  its  existence.  Head  v.  Providence 
Ins.  Co.,  2  Cranch,  127;  Partmouth  College  v.  Woodwardy 
4  "Wheat.  636;  Bank  of  United  States  v.  Pandridge,  12 
"Wheat.  64;  Charles  River  Bridge  v.  Warren  Bridge,  11 
Pet.  544;  Bank  of  Augusta  v.  Parle,  13  Pet.  587." 

§  29.  Hood  V.  The  Neiv  Yoric  &  K  H.  R.  Co.,  22  Conn. 
502  {1853). —  In  this  case  the  powers  of  corporations  are 
very  clearly  and  accurately  defined.  It  was  a  case  where 
the  agent  of  the  railroad  company,  a  corporation  running 
their  cars  from  New  Haven  to  Plainville,  sold  the  plaint- 
iff a  ticket  for  the  fair  at  CoUinsville,  which  was  four 


§  29.]  THE   DOCTKINE   GENERALLY.  35 

miles  beyond  Plainville,  from  which  last-named  place 
passengers  were  being  conveyed  to  Collinsville  by  means 
of  sleighs  or  carriages  upon  runners,  which  stage  line 
was  owned  by  another  company.  Plaintiff  was  thrown 
out  of  the  sleigh,  and  sustained  severe  injuries,  and 
brought  his  action  upon  a  special  contract  to  carry  him 
safely  by  railroad  and  stage  from  ISTew  Haven  to  Collins- 
ville. The  defendant  pleaded  want  of  power  to  make 
any  such  contract,  and  denied  ever  having  made  such  con- 
tract. It  was  held  that  defendant  was  not  estopped  to 
claim  that  under  their  charter  they  had  no  power  to 
enter  into  the  alleged  contract,  and  that  it  was  not  ob- 
ligatory upon  them.  Mr.  Justice  Ellsworth,  who  deliv- 
ered the  opinion  of  the  court,  inter  alia,  said:  "It  is 
found  that  the  defendants  had  no  power  to  enter  into  the 
undertaking  in  question,  and  therefore,  as  a  ground  of 
claim,  it  must  be  agreed  the  undertaking  merely  is  of  no 
avail,  for  the  reason  that  the  directors,  having  no  au- 
thority, did  not  in  legal  estimation  make  the  contract  for 
the  company.  The  question  is,  are  the  defendants  es- 
topped setting  up  this  in  their  defense  ?  The  statement 
of  the  case  carries  with  it,  on  its  very  face,  conviction  to 
the  mind  that  it  cannot  be  so.  The  defendants  estopped 
from  denying  that  they  have  done  what  they  never  could 
have  done!  It  is  a  question  of  power  under  the  charter; 
and  however  individuals  may  be  liable  and  estopped,  who 
untruly  hold  themselves  out  as  clothed  with  power,  the 
defendants  cannot  be  estopped  on  any  such  principle  of 
law  known  to  the  court.  The  notion  of  an  estoppel  in 
jpais,  to  which  class,  if  any,  this  estoppel  belongs,  pro- 
ceeds on  the  idea  of  acquiescence  or  consent;  a  contract 
expressly  or  impliedly  given  by  the  party  claimed  to  be 
estopped.  Of  course  there  must  be  legal  possibility  or 
there  can  be  no  real  or  supposed  acquiescence  and  consent^ 


36  THE   DOOTKLNE   GENERALLY.  [§  29. 

and  where  consent  may  be  given  silence  may  be  sufficient 
proof  that  it  Is  given.  ...  If  a  corporation  has 
the  power  to  do  a  thing,  and  is  in  the  habit  of  doing  it 
in  a  particular  way,  it  may  bind  itself  to  third  persons, 
though  it  do  not  pursue  the  exact  mode  prescribed  in  the 
charter;  for  the  mode  is  not  exclusive  but  concurrent. 
...  It  being  a  question  of  power,  silent  acquiescence  in 
the  acts  of  subordinate  agents  does  not  make  a  stronger 
case ;  for  if  a  formal  contract  is  not  obligatory  on  the 
company,  one  proved  by  inferior  or  circumstantial  evi- 
dence certainly  is  not.  The  kind  of  evidence  is  quite  im- 
material. Should  the  directors  of  a  savings  bank,  or  of 
any  bank,  contract  with  a  ship-builder  for  a  steamship  to 
navigate  the  ocean,  would  this  contract  bind  the  company? 
Certainly  not;  because  the  directors  have  no  power  to 
make  it,  nor  would  they  have  more  were  they  to  make 
such  contracts  from  day  to  da3\  The  legislature  has  ab- 
solutely marked  the  limit  of  this  power,  and  they  cannot 
exceed  it  under  the  charter;  and  if  the  directors,  even 
with  all  the  stockholders  at  their  side,  transcend  the 
limits  of  the  charter,  and  make  contracts  foreign  to  their 
business,  they  onl}''  act  for  themselves.  The  reason  is, 
there  can  be  no  consent  of  the  corporation.  The  consent 
of  individual  stockholders,  however  repeated,  is  not  their 
consent,  nor  is  it  admissible  proof  to  establish  consent; 
so  that,  if  it  were  true  every  stockholder  had  expressed 
his  consent,  it  would  make  no  difference  in  the  case.  If 
this  is  not  so,  there  are  no  restrictions  or  limitations  on 
chartered  companies,  and  they  may  do  anything  the  di- 
rectors please  which  is  not  absolutely  unlawful.  The 
exercise  of  poAver  is  held  to  prove  itself,  which  is  absurd. 
.  .  .  Were  the  charter  a  public  one,  it  is  agreed  that 
the  company  would  not  be  bound  by  such  acts,  however 
repeated;  but  in  truth  a  private  charter  is  not  essentially 


§  30.]  THE   DOCTKINE   GENERALLY.  37 

different  from  a  public  one  in  this  respect;  for  the  plaint- 
iff must  have  known  that  the  defendants  were  incorpo- 
rated by  the  legislature  for  the  purpose  of  making  or 
using  only  a  railroad.  The  public  know  where  the  charter 
may  be  seen  and  what  it  contains.  They  hold  that  a 
principal  that  can  give  authority,  whether  a  corporation 
or  a  person,  may,  when  one  assumes  to  act  for  him,  and 
he  does  not  object  to  it,  be  estopped  denying  his  agency; 
but  an  infant  is  never  estopped,  nor  a  married  woman, 
nor  ought  a  body  of  stockholders  to  be,  united  as  they 
are  under  a  specific  charter,  especially  when  the  directors 
have  disregarded  it  and  assumed  to  act  according  to  their 
own  pleasure.  Could  the  company  by  legal  possibility  do 
the  act,  it  would  be  otherwise.  .  .  .  We  repeat  that 
the  directors  and  stockholders  have  no  corporate  powers 
or  relations,  and  can  give  no  consent,  but  what  is  within 
the  appropriate  business  of  the  charter.  Again,  it  is  said 
that  the  defendants  ought  not  to  be  permitted  to  call  in 
question  the  acts  of  their  agents.  Why  not  as  much  as 
other  principals  whose  agents  transcend  their  authority 
and  abuse  their  trust?  If  it  is  replied  the  directors  have 
suffered  this  course  of  things  for  months  when  they  could 
have  arrested  it  at  once,  we  ask  whose  agents  they  were? 
Certainly  not  of  the  innocent  stockholders.  The  direct- 
ors represent  thein  only  while  they  act  within  the  scope  of 
the  charter;  the  charter  is  the  measure  of  their  power;, 
and  sad  would  it  be  if  directors  could  trample  upon  this, 
and  yet  bind  the  stockholders  as  firmly  as  if  they  were 
acting  within  it.  If  the  directors  have  done  wrong,  let 
them  suffer  the  consequences." 

§  30.  Pearce  v.  Madison  &  Indiana  B.  Co.,  31  How.  Ul 
{1858). —  The  first  case,  however,  in  the  United  States 
supreme  court,  where  the  doctrine  of  ultt^a  vires  was  di- 


38  THE    DOCTRINE    GENERALLY.  [§  30. 

rectly  considered,  was  in  the  case  of  Pearce  v.  Madison 
<&  Indiana  R.  Co.,  supra,  decided  in  1858,  It  was  there 
held  that  two  corporations  chartered  by  the  state  of  In- 
diana to  construct  and  manage  distinct  though  connect- 
ing railroads  had  no  power  to  consolidate  themselves  into 
one  corporation,  or  to  establish  a  steamboat  line  on  the 
Ohio  river  to  be  run  in  connection  with  the  railroad,  and, 
therefore,  were  not  liable  on  a  promissory  note  sued  on, 
which  had  been  given  by  the  officers  of  the  consolidated 
line  in  payment  of  a  steamboat.  The  opinion  was  deliv- 
ered by  Mr.  Justice  Campbell,  and  in  defining  the  powers 
of  corporations  he  used  the  following  forcible  and  explicit 
language:  "The  rights,  duties  and  obligations  of  the 
defendants  are  defined  in  the  acts  of  the  legislature  of 
Indiana,  under  which  they  were  organized,  and  reference 
must  be  had  to  these  to  ascertain  the  validity  of  their 
contracts.  They  empower  the  defendants  respectively  to 
do  all  that  was  necessary  to  construct  and  put  into  opera- 
tion a  railroad  between  the  cities  which  are  named  in  the 
acts  of  incorporation.  There  was  no  authority  of  law  to 
consolidate  these  corporations  and  to  place  both  under 
the  same  management,  or  to  subject  the  capital  of  the 
one  to  answer  for  the  liabilities  of  the  other;  and  so  the 
courts  of  Indiana  have  determined.  But  in  addition  to 
that  act  of  illegality,  the  managers  of  these  corporations 
established  a  steamboat  line  to  run  in  connection  with 
the  railroad,  and  thereby  diverted  their  capital  from  the 
objects  contemplated  by  their  charters  and  exposed  it  to 
perils  for  which  they  afforded  no  sanction.  Now,  per- 
sons dealing  with  the  managers  of  a  corporation  must  take 
notice  of  the  limitations  imposed  upon  their  authority  hy 
the  act  of  incorporation.  These  powers  are  conceded  in 
consideration  of  the  advantage  the  public  is  to  receive 
from  their  direct  and  intelligent  employment,  and  the 


§  31.]  THE    DOCTEINE    GENERALLY.  39 

public  have  an  interest  that  neither  the  managers  nor 
stockholders  of  the  corporation  shall  transcend  their  au- 
thority." 

§  31.  Bissell  V.  Michigan  Southern  &  Northern  In- 
diana B.  Co.,  2^  N.  Y.  ^^68  {I860).—  This  was  an  action 
against  two  distinct  railroad  companies  for  a  breach  of 
their  duty  safely  to  carry  the  plaintiff,  a  passenger  upon 
a  train  of  cars,  which  they,  by  a  contract  between  them, 
had  united  in  running,  and  by  reason  of  the  negligence  of 
their  agents  suffering  a  collision  with  another  train,  by 
which  plaintiff's  leg  was  broken.  In  the  decision  of  the 
case  it  was  held,  by  an  almost  unanimous  court  (Denio,  J., 
dissenting),  that  where  two  corporations,  chartered  re- 
spectively by  the  states  of  Michigan  and  Indiana,  with 
power  to  each  to  build  and  operate  a  railroad  within  its 
own  state,  have  united  in  the  business  of  transporting 
passengers  over  a  third  road  in  the  state  of  Illinois,  be- 
yond the  limits  authorized  by  the  charter  of  either,  such 
corporations  are  jointly  liable  for  injuries  to  a  passenger 
resulting  from  the  negligence  of  their  employees.  It  was 
further  held  by  the  court  that  corporations,  like  natural 
persons,  have  power  and  capacity  to  do  wrong;  that  they 
may,  in  their  contracts  and  dealings,  break  over  the  re- 
straints imposed  upon  them  by  their  charters ;  and  when 
they  do  so,  their  exemption  from  liability  cannot  be 
claimed  on  the  mere  ground  that  they  have  no  attributes 
or  faculties  which  render  it  impossible  for  them  thus  to 
act. 

The  interest  in  the  Bissell  Case,  however,  and  the  celeb- 
rity it  has  attained,  have  not  arisen  from  the  decision 
there  rendered,  but  from  the  several  propositions  laid 
down  by  the  learned  judges  who  so  exhaustively  exam- 
ined and  discussed  the  various  phases  of  the  doctrine  of 


40  THE   DOCTRINE   GENERALLY.  [§  ^l* 

ultra  vires  in  its  application  to  chartered  corporations. 
The  propositions  laid  down  by  Mr.  Chief  Justice  Corn- 
stock  (and  he  was  alone  in  his  contention)  were,  among 
others,  the  following:  First  Corporations  have  no  right 
to  violate  their  charters,  but  they  have  capacity  to  do  so, 
and  to  be  bound  by  their  acts  where  a  repudiation  of 
such  acts  would  result  in  manifest  wrong  to  innocent 
parties.  Second.  A  corporation  is  more  than  an  agent 
of  the  stockholders.  Such  bodies  are  clothed  with  the 
legal  title  to  the  property  or  funds  which  represent  the 
capital,  in  trust,  however,  for  the  shareholders,  who  are 
the  beneficial  owners ;  and,  like  other  trustees,  it  is  possi- 
ble for  them  to  deal  with  capital  in  a  manner  and  for 
purposes  not  authorized  by  their  charters,  and  to  be 
bound  by  such  dealings.  Third.  The  plea  of  ultra  vireSy 
according  to  its  just  meaning,  imports,  not  that  the  cor- 
poration could  not,  and  did  not  in  fact,  make  the  unau- 
thorized contract,  but  that  it  ought  not  to  have  made  it. 
Such  a  defense,  therefore,  necessarily  rests  upon  the 
violation  of  trust  or  duty  toward  the  shareholders,  and 
is  not  to  be  entertained  where  its  allowance  will  do  a 
greater  wrong  to  innocent  third  parties.  The  acquiescence 
of  the  shareholders  in  the  abuse  will  prevent  the  inter- 
position of  such  a  plea.  Fourth.  Where  a  corporation 
has  received  the  consideration  of  the  unauthorized  con- 
tract, and  a  restitution  will  not  do  complete  justice,  the 
remedy  of  the  other  party  is  not  confined  to  a  suit  in  dis- 
affirmance of  such  contract,  but  may  be  directly  upon  it. 
So  the  contract  will  be  enforced  under  any  circumstances 
of  controlling  equity. 

The  propositions  contended  for  by  Mr.  Justice  Selde:i 
in  the  above  case,  in  which  Clerke,  J.,  concurred,  were 
set  forth  as  follows :  First.  The  powers  and  privileges  of 
corporations  are  conferred,  not  for  the  private  conven- 


§  32.]  THE   DOCTRINE   GENERALLY.  41 

ience  of  the  corporators,  but  for  public  purposes  and  to 
promote  the  public  interest.  They  are  granted  at  the 
expense  of  the  public,  since  they  create  advantages  which 
persons  unincorporated  do  not  possess.  The  public  bene- 
fit is  treated  as  a  compensation  for  the  grant;  audit 
would  be  an  abuse  of  legislative  power  to  make  the  grant 
except  in  contemplation  of  such  benefit.  Second.  The 
legislature,  in  conferring  corporate  power,  is  presumed, 
in  every  instance,  to  have  carefully  considered  the  public 
interest,  and  to  have  granted  just  so  much  power  as  that 
interest  requires.  Third.  If  corporations  are  permitted 
to  usurp  powers  not  granted,  it  is  done  at  the  expense  of 
the  public.  Sound  policy,  therefore,  demands  that  they 
should  be  kept  strictly  within  their  chartered  limits;  and 
every  contract  made  by  them  which  exceeds  those  limits, 
like  all  other  contracts  in  contravention  of  public  policy, 
is  illegal  and  therefore  void.  Fourth.  It  is  a  good  de- 
fense for  a  corporation,  when  sued  upon  a  contract,  that, 
in  making  such  a  contract,  it  exceeded  its  corporate  pow- 
ers ;  this  defense  being  allowed,  not  for  the  sake  of  the 
corporation,  but  for  that  of  the  public.  The  corporation 
would,  however,  be  estopped  from  setting  up  the  defense, 
in  a  case  where  the  other  party  to  the  contract  could  not 
be  presumed  to  be  cognizant  of  the  excess  of  power. 

The  arguments  advanced  by  the  two  learned  judicial 
combatants  in  support  of  their  propositions  will  be  here- 
after noticed. 

§  32.  Monument  National  BanTc  v.  Globe  Worls,  101 
Mass.  67  {1869). —  It  was  held  in  this  case  that  the  note 
of  a  manufacturing  corporation  in  the  hands  of  a  holder 
in  good  faith,  for  value,  who  took  it  before  maturity  and 
without  knowledofe  that  the  maker  had  not  received  full 
consideration,  could  be  enforced  against  the  corporation. 


42  THE    DOCTRINE    GENERALLY.  [§  33, 

although  it  was  made  as  an  accommodation  note.  This 
on  the  ground  that  the  corporation  had  power  to  make 
promissory  notes,  and  the  making  of  an  accommodation 
note  was  only  an  abuse  of  that  power,  which  abuse  was, 
of  course,  unknown  to  the  holder  or  purchaser  for  value. 

§  33.  Miners'  Ditch  Co.  v.  Zellerhacli,  37  Cat.  51^3  {1869). 
This  case  has  been  frequently  cited  as  sustaining  the  prop- 
ositions contended  for  by  Chief  Justice  Comstock  in  the 
Bissell  Case,  supra.  It  holds  directly  the  reverse.  Chief 
Justice  Sawyer,  in  delivering  the  opinion  of  the  court, 
says :  "  From  the  cases  cited  it  very  clearly  appears  that 
the  question,  as  between  stockholders  and  the  corporation, 
is  a  very  different  one  from  that  which  arises  between 
the  corporation  itself  and  strangers  dealing  with  it,  and 
the  principle  established,  when  the  contract  arises  be- 
tween strangers  and  the  corporation,  is  whether  the  act 
in  question  is  one  which  the  corporation  is  not  authorized 
to  perform  under  any  circumstances,  or  one  that  may  be 
performed  by  the  corporation  for  some  purposes,  but  may 
not  for  others.  In  the  former  case  the  defense  of  ultima 
vires  is  available  to  the  corporation  as  against  all  persons.^ 
'because  they  are  hound  to  know  fror)i  the  law  of  its  exist- 
ence that  it  has  no  power  to  perfor-m  the  act.  But  in  the 
latter  case  the  defense  may  or  not  be  available,  depending 
upon  the  question  whether  the  party  dealing  with  the 
corporation  is  aware  of  the  intention  to  perform  the  act 
for  an  unauthorized  purpose,  or  under  circumstances  not 
justifying  its  performance.  And  the  test  as  between 
strangers,  having  no  knowledge  of  an  unlawful  purpose, 
and  the  corporation  is  to  compare  the  terms  of  the  con- 
tract with  the  provisions  of  the  law  from  which  the  cor- 
poration derives  its  powers,  and,  if  the  court  can  see  that 
the  act  to  be  performed  is  necessarily  beyond  the  powers 


§§  34,  35.]  THE   DOCTRINE   GENERALLY.  43 

of  the  corporation  for  any  purpose,  the  contract  cannot 
be  enforced,  otherwise  it  can.  .  .  .  Strangers  are 
presumed  to  know  the  law  of  the  land,  and  they  are 
bound,  when  dealing  with  corporations,  to  know  the  pow- 
ers conferred  by  their  charters.  These  are  open  to  their 
inspection,  and  it  is  easy  to  determine  whether  the  act  is 
within  the  scope  of  the  general  powers  for  that  purpose." 

§  34.  Franldin  Co.  v.  Lewiston  lyistitution  for  Savings, 
68  Me.  Ji3  (1877). —  This  was  a  case  where  the  trustees 
of  the  Institution  for  Savings  subscribed  for  $50,000  of 
the  capital  stock  of  the  Continental  Mills,  and,  having  no 
money  to  pay  for  it,  the  Franklin  Company,  another  cor- 
poration, paid  that  amount  to  the  Continental  Mills,  tak- 
ing the  notes  of  the  savings  institution  therefor  and  a 
certificate  of  the  stock  in  their  own  name  as  collateral 
security  for  the  payment  of  the  notes.  It  was  held,  on 
suit  brought  to  enforce  payment,  that  the  action  of  the 
trustees  of  the  savings  institution  was  ultra  vi?'es;  that  it 
was  not  within  the  authority  of  savings  institutions,  at  a 
time  when  they  have  no  funds  for  investment,  to  purchase 
stocks  or  other  property  not  needed  for  immediate  use, 
on  credit,  and  thus  create  a  debt  binding  upon  the  insti- 
tution ;  that  the  Franklin  Company,  having  participated 
in  the  illegal  transaction,  could  not  claim  the  privilege  of 
a  honajide  holder  of  commercial  paper;  and  that  the  sav- 
ings institution,  having  received  no  benefit  from  the  trans- 
action, was  not  estopped  to  set  up  the  defense  of  ultra 
vires. 

%  35.  Tlwmas  v.  Railroad  Co.,  101  U.  S.  71  (1879).— 
In  this  case  the  doctrine  of  ultra  vires  was  directly  con- 
sidered, and  the  previous  decisions  of  that  court  re- 
affirmed.    This  case  has  perhaps  been  cited  and  approved 


44:  THE   DOCTEINE    GENERALLY.  [§  35. 

by  the  courts  of  this  country  more  than  any  other  case 
bearing  upon  this  doctrine.  It  was  there  decided  that  a 
lease  for  twenty  years  by  a  railroad  company  of  its  rail- 
road, rolling  stock  and  franchises,  in  consideration  of 
being  paid  one-half  of  the  gross  sums  collected  from  the 
operation  of  the  road  by  the  lessees  during  the  term,  and 
reserving  to  the  lessor  the  right  to  terminate  the  lease 
and  retake  possession  of  the  road  at  any  time,  paying  to 
the  lessee  the  value  of  the  unexpired  term,  was  void ;  and 
that  the  corporation  upon  terminating  the  lease  and  re- 
suming possession  when  the  lessees  had  been  in  posses- 
sion five  years,  and  the  accounts  of  the  parties  for  those 
years  having  been  adjusted  and  paid,  was  not  liable  to  an 
action  by  the  lessees  to  recover  the  value  of  the  unex- 
pired term.  Mr.  Justice  Miller,  who  delivered  the  judg- 
ment of  the  court,  in  the  course  of  his  learned  opinion 
said :  "  The  powers  of  corporations  organized  under  legis- 
lative statutes  are  such,  and  such  only,  as  those  statutes 
confer.  Conceding  the  rule  applicable  to  all  statutes,  that 
what  is  fairly  implied  is  as  much  granted  as  what  is  ex- 
pressed, it  remains  that  the  charter  of  a  corporation  is 
the  measure  of  its  powers,  and  that  the  enumeration  of 
those  powers  implies  the  exclusion  of  all  others. 

"  There  is  another  principle  of  equal  importance,  and 
equally  conclusive  against  the  validity  of  this  contract, 
which,  if  not  coming  exactly  within  the  doctrine  of  ultra 
vires  as  we  have  just  discussed  it,  shows  very  clearly  that 
the  railroad  company  was  without  the  power  to  make 
such  a  contract.  That  principle  is  that  where  a  corpora- 
tion, like  a  railroad  company,  has  granted  to  it  by  a  char- 
ter a  franchise  intended  in  a  large  measure  to  be  exercised 
for  the  public  good,  the  due  performance  of  those  func- 
tions being  the  consideration  of  the  public  grant,  any  con- 
tract which  disables  the  corporation  from  performing 


§  36.]  THE    DOCTKINE    GENERALLY.  45 

those  functions,  which  undertakes,  without  the  consent  of 
the  state,  to  transfer  to  others  the  rights  and  powers  con- 
ferred by  the  charter,  and  to  release  the  grantees  from 
the  burden  which  it  imposes,  is  a  violation  of  the  contract 
with  the  state,  and  is  void  as  against  public  policy." 

§  36.  Davis  v.  Old  Colony  B.  Co.,  131  Mass.  258  {1879). 
This  was  an  action  on  an  agreement  signed  by  the  Old 
Colony  Eailroad  Company  to  guaranty  plaintiffs  against 
any  deficiency  that  might  arise  toward  defraying  the  ex- 
penses of  a  jubilee  and  musical  festival  to  be  held  in  Bos- 
ton. The  question  in  the  case  was  whether  it  was  within 
the  powers  of  the  railroad  company  to  bind  itself  by  such 
an  agreement.  It  was  held  that  it  was  not,  although 
such  agreement  was  made  with  the  reasonable  belief  that 
the  holding  of  the  proposed  festival  would  be  of  great 
pecuniary  benefit  to  the  corporation  by  increasing  its 
proper  business,  and  the  festival  was  held  and  expenses 
incurred  in  reliance  upon  the  guaranty.  This  case  pre- 
sents a  most  elaborate  examination  of  the  doctrine  of 
ultra  vires,  some  fifty-three  cases  bearing  directly  on  the 
subject  being  examined.  The  opinion  of  the  court  was 
delivered  by  Chief  Justice  Gray  (now  associate  justice  of 
the  United  States  supreme  court),  and  is  one  of  the  strong- 
est and  most  convincing  opinions  on  this  subject  ever  de- 
livered ia  this  country.  In  the  course  of  his  opinion  the 
learned  chief  justice,  inter  alia,  says: 

"  Upon  full  consideration  of  the  elaborate  arguments 
of  counsel  upon  that  question,  the  court  is  of  the  opinion 
that  the  agreement  is  ultra  vires,  and  therefore  no  action 
can  be  maintained  upon  it  against  either  defendant.    .    .    . 

"  The  corporation  has  power  to  do  such  business  only 
as  it  is  authorized  by  its  act  of  incorporation  to  do,  and 
no  other.     It  is  not  held  out  by  the  government  nor  by 


46  THE   DOCTRINE    GENERALLY.  [§  37. 

the  stockholders  as  authorized  to  make  contracts  which 
are  beyond  the  purposes  and  scope  of  its  charter.  It  i& 
not  vested  with  all  the  capacities  of  a  natural  person,  or 
of  an  ordinary  partnership,  but  with  such  only  as  its 
charter  confers.  If  it  exceeds  its  chartered  powers,  not 
only  may  the  government  take  away  its  charter,  but  those 
who  have  subscribed  to  its  stock  may  avoid  any  contract 
made  by  the  corporation  in  clear  excess  of  its  powers.  If 
it  makes  a  contract  manifestly  beyond  the  powers  con- 
ferred by  its  charter,  and  therefore  unlawful,  a  court  of 
chancery,  on  the  application  of  a  stockholder,  will  restrain 
the  corporation  from  carrying  out  the  contract ;  and  a 
court  of  common  law  will  sustain  no  action  on  the  con- 
tract against  the  corporation.     .     .     . 

"  The  holding  of  a  '  world's  peace  jubilee  and  interna- 
tional musical  festival '  is  an  enterprise  wholly  outside  the 
objects  for  which  a  railroad  corporation  is  established, 
and  a  contract  to  pay,  or  to  guaranty  the  payment  of, 
the  expenses  of  such  an  enterprise,  is  neither  a  necessary 
nor  an  appropriate  means  of  carrying  on  the  business  of 
the  railroad  corporation,  is  an  application  of  its  funds  to 
an  object  unauthorized  and  impliedly  prohibited  by  its 
charter,  and  is  beyond  its  corporate  powers.  Such  a  con- 
tract cannot  be  held  to  bind  the  corporation,  by  reason  of 
the  supposed  benefit  which  it  may  derive  from  an  increase 
of  passengers  over  its  road,  upon  any  grounds  that  would 
not  hold  it  equally  bound  by  a  contract  to  partake  in  or 
to  guaranty  the  success  of  any  enterprise  that  might  at- 
tract population  or  travel  to  any  city  or  town  upon  or 
near  its  line." 

§  37.  Central  Transportation  Co.  v.  Pullman  Palace 
Car  Co.,  139  U.  S.  ^^  {1890).—  The  doctrine  of  ultra  vires 
has  frequently  come  before  the  supreme  court  of  the 


§  37.]  THE   DOCTEINE   GENERALLY.  47 

United  States  for  application  and  construction,  and,  when 
directly  considered,  the  court  has  never  wavered  from  the 
principles  first  enunciated  by  Chief  Justice  Marshall  in 
1804  in  the  case  of  Head  v.  Providence  Ins.  Co.,  hereto- 
fore alluded  to.  In  Central  Transportation  Co.  v.  Pull- 
man Palace  Car  Co.,  supra,  all  the  cases  bearing  upon 
this  subject  were  cited,  examined  and  re-affirmed.  In 
that  case  the  doctrine  is  given  one  of  the  most  elaborate 
and  complete  discussions  ever  extended  to  the  question, 
and  the  defense  of  xdtra  vires  is  examined  in  all  its  phases. 
To  any  but  a  prejudiced  mind  the  opinion  and  adjudica- 
tion in  this  case  should  forever  set  at  rest  the  question  as 
to  what  construction  should  be  placed  on  the  doctrine  of 
ultra  vires  in  this  country.  It  was  the  province  and  priv- 
ilege of  Associate  Justice  Gray,  who,  as  chief  justice  of 
the  supreme  court  of  Massachusetts,  rendered  such  an 
elaborate  opinion  in  the  Old  Colony  Railroad  Company 
Case,  to  deliver  the  opinion  in  this  case,  nor  could  it  have 
been  left  to  the  elucidation  of  an  abler  mind.  The  facts 
of  the  case  were  substantially  as  follows:  The  Central 
Transportation  Company  was  a  corporation  under  the 
general  laws  of  Pennsylvania,  to  exist  for  twenty  years, 
with  a  certain  capital  stock,  organized  for  "  the  transpor- 
tation of  passengers  in  railroad  cars  constructed  and 
owned  by  the  company  "  under  certain  patents,  and  car- 
ried on  the  business  of  manufacturing  sleeping-cars  under 
its  patents,  and  of  hiring  or  letting  the  cars  to  railroad 
companies  by  written  contracts,  receiving  a  revenue  from 
the  sale  of  berths  and  accommodations  to  passengers^ 
Seven  years  after  its  incorporation,  by  special  act  of  the 
legislature  of  Pennsylvania,  the  charter  was  extended 
for  ninety-nine  years,  and  the  corporation  was  empowered 
by  said  special  act  to  double  its  capital  stock  and  to  "  enter 
into  contracts  with  corporations  of  this  or  any  other  state 


48  THE   DOCTRINE   GENERALLY.  [§  37. 

for  the  leasing  or  hiring  and  transfer  to  them,  or  any  of 
them,  of  its  railway  cars  and  other  personal  property." 
The  corporation  forthwith  entered  into  an  indenture  with 
the  Pullman  Palace  Car  Company,  a  corporation  by  vir- 
tue of  a  special  act  of  the  legislature  of  Illinois,  engaged 
in  a  similar  business,  by  which  it  leased  and  transferred 
to  that  corporation  all  its  cars,  railroad  contracts,  patent 
rights  and  other  personal  property,  moneys,  credits  and 
rights  of  action  for  the  term  of  ninety-nine  years,  except 
so  far  as  the  contracts  and  patents  should  expire  sooner, 
and  covenanted  not  to  "  engage  in  the  business  of  manu- 
facturing, using  or  hiring  sleeping-cars "  while  the  lease 
should  remain  in  force ;  and  the  lessee  covenanted  to  pay 
all  existing  debts  of  the  lessor,  and  to  pay  to  the  lessor 
annually  a  large  sum  of  money  during  the  term  of  ninety- 
nine  years  unless  the  indenture  should  be  sooner  termi- 
nated. Upon  action  brought  by  the  Transportation  Com- 
pany to  recover  the  amount  due  for  the  last  three  quarters, 
according  to  the  terms  of  the  lease,  and  after  a  most 
elaborate  examination  and  discussion  of  the  various  de- 
cisions in  this  country  and  England,  it  was  held  that  the 
contract  of  lease  was  unlawful  and  void  because  beyond 
the  corporate  powers  of  the  lessor,  and  involving  an 
abandonment  of  its  duty  to  the  public,  and  therefore  no 
action  could  be  maintained  by  the  lessor  upon  the  con- 
tract or  to  recover  the  sums  thereby  payable,  even  while 
the  lessee  had  enjoyed  the  benefits  of  the  contract.  Mr. 
Justice  Gray,  in  the  course  of  his  masterful  opinion,  says : 
"  The  charter  of  a  corporation,  read  in  the  light  of  gen- 
eral laws  which  are  applicable,  is  the  measure  of  its  pow- 
ers, and  the  enumeration  of  those  powers  implies  the 
exclusion  of  all  others  not  fairly  incidental.  All  contracts 
made  by  a  corporation  beyond  the  scope  of  those  powers 
are  unlawful  and  void,  and  no  action  can  be  maintained 


§  37.]  TUE   DOCTEINE    GENERALLY.  49 

upon  them  in  the  courts,  and  this  upon  three  distinct 
grounds:  the  obligation  of  every  one  contracting  with  a 
corporation  to  tali:e  notice  of  the  legal  limits  of  its  pow- 
ers; the  interest  of  the  stockholders  not  to  be  subjected 
to  risks  which  they  have  never  undertaken;  and,  above 
all,  the  interest  of  the  public  that  the  corporation  shall 
not  transcend  the  powers  conferred  upon  it  by  law.  A 
corporation  cannot,  without  the  consent  of  the  legislature, 
transfer  its  franchises  to  another  corporation,  and  abne- 
gate the  performance  of  the  duties  to  the  public  imposed 
upon  it  by  its  charter  as  the  consideration  for  the  grant 
of  its  franchise.  ]SI^either  the  grant  of  a  franchise  to 
transport  passengers,  nor  a  general  authority  to  sell  and 
dispose  of  property,  empowers  the  grantee,  while  it  con- 
tinues to  exist  as  a  corporation,  to  sell  or  to  lease  its 
entire  property  and  franchises  to  another  corporation. 
These  principles  apply  equally  to  companies  incorporated 
by  special  charter  from  the  legislature  and  to  those  formed 
by  articles  of  association  under  general  laws.     .     .     . 

"  A  contract  of  a  corporation  which  is  ultra  vires  in  the 
proper  sense,  that  is  to  say,  outside  the  objects  of  its  cre- 
ation as  defined  in  the  law  of  its  organization,  and  there- 
fore beyond  the  powers  conferred  upon  it  by  the  legisla- 
ture, is  not  voidable  only,  but  wholly  void  and  of  no  legal 
effect.  The  objection  to  the  contract  is  not  merely  that 
the  corporation  ought  not  to  have  made  it,  hut  that  it 
could  not  malce  it.  The  contract  cannot  be  ratified  by 
either  party  because  it  could  not  have  been  authorized 
by  either.  Ko  performance  on  either  side  can  giv^e  the 
unlawful  contract  any  validity,  or  be  the  foundation  of 
any  right  of  action  upon  it. 

"  When  a  corporation  is  acting  within  the  general  scope 
of  its  powers  conferred  upon  it  b}^  the  legislature,  the 
corporation,  as  well  as  the  persons  contracting  Tvith  it, 
4 


,60  THE   DOOTKINE   GENERALLY.  [§  37. 

may  be  estopped  to  deny  that  it  has  complied  with  the 
legal  formalities  which  were  prerequisites  to  its  existence 
or  to  its  action,  because  such  requisites  might  in  fact  have 
been  complied  with.  But  when  the  contract  is  beyond 
the  powers  conferred  upon  it  by  existing  laws,  neither  the 
corporation  nor  the  other  party  to  the  contract  can  be 
estopped  by  assenting  to  it,  or  by  acting  upon  it  to  show 
that  it  was  prohibited  by  those  laws. 

"  A  contract  ultra  vires  being  unlawful  and  void,  not 
because  it  is  in  itself  immoral,  but  hecause  the  corporation^ 
hy  the  laio  of  its  creation^  is  incapahle  of  making  it,  the 
courts,  while  refusing  to  maintain  any  action  upon  the 
unlawful  contract,  have  always  striven  to  do  justice  be- 
tween the  parties,  so  far  as  could  be  done  consistently 
with  adherence  to  law,  by  permitting  property  or  money, 
parted  with  on  good  faith  of  the  unlawful  contract,  to  be 
recovered  back  or  compensation  to  be  made  for  it. 

"In  such  case,  however,  the  action  is  not  maintained 
upon  the  unlawful  contract,  nor  according  to  its  terms; 
but  on  an  implied  contract  of  the  defendant  to  return,  or 
failing  to  do  that,  to  make  compensation  for,  property  or 
money  which  it  has  no  right  to  retain.  To  maintain  such 
action  is  not  to  affirm,  but  to  disaffirm,  the  unlawful  con- 
tract. 

"  The  ground  and  the  limits  of  the  rule  concerning  the 
remedy,  in  the  case  of  a  contract  ultra  vires,  which  has 
been  partly  performed,  and  under  which  property  has 
passed,  can  hardly  be  summed  up  better  than  they  were 
by  Mr.  Justice  Miller  in  a  passage  already  quoted,  where 
he  said  that  the  rule  '  stands  upon  the  broad  ground  that 
the  contract  itself  is  void,  and  that  nothing  which  has 
been  done  under  it,  nor  the  action  of  the  court,  can  in- 
fuse any  vitality  into  it;'  and  that  "where  the  parties 
have  so  far  acted  under  such  a  contract  that  they  cannot 


§  38.]  THE   DOCTEINE   GENERALLY.  61 

be  restored  to  their  original  condition,  the  court  inquires 
if  relief  can  be  given  independently  of  the  contract,  or 
whether  it  will  refuse  to  interfere  as  the  matter  stands.' 
118  U.  S.  317." 

§  38.  Lucas  v.  The  White  Line  Transportation  Co.,  70 
Iowa,  SJf-l. —  This  was  an  action  to  recover  contribution  as 
co-surety  on  a  bond.  The  defendant  was  a  corporation 
organized  for  the  purpose  of  engaging  in  the  "  general 
freight  and  transfer  business."  By  its  secretary  it  joined 
the  plaintiff  in  executing  a  bond  of  suretyship  for  L.  and 
M.  to  the  B.  Co.  Afterwards  L.  and  M.  failed,  but  they 
executed  their  note  to  plaintiff  and  defendant  for  the 
amount  of  the  bond,  in  consideration  of  the  payers  as- 
suming that  amount  of  their  indebtedness  to  the  B.  Co. 
Thereupon  the  defendant,  by  its  president,  joined  plaint- 
iff in  a  letter  to  the  B.  Co.,  assuming  liability  for  the  in- 
debtedness of  L.  and  M.  to  that  amount.  It  also,  by  its 
officers  and  attorneys,  joined  plaintiff  in  an  action  on 
said  note  against  L.  and  M.  which  was  aided  by  attach- 
ment. Defendant  refused  to  pay  to  the  B.  Co.  any  por- 
tion of  the  indebtedness  thus  assumed,  and  plaintiff  paid 
the  whole  of  it,  and  sought  to  recover  contribution  from 
the  defendant  company  as  a  co-surety.  It  was  held  that 
defendant's  original  contract  of  suretyship  was  ultra  vires, 
as  was  also  its  assumption  of  indebtedness  by  the  letter 
signed  by  its  president,  and  that  the  other  acts  of  defend- 
ant's officers  did  not  estop  it  from  insisting  on  that  fact 
as  a  defense,  and  that  no  recovery  could  be  had.  Roth- 
rock,  J.,  in  delivering  the  opinion  of  the  court,  among 
other  things,  says : 

"  The  corporation  defendant  is  acting  under  the  gen- 
eral incorporation  laws  of  the  state,  and  from  the  provis- 
ions of  its  articles  and  the  statute  it  derives  its  powers. 


52  THE   DOCTKINE   GENEEALLY.  [§  38. 

A  corporation  exists  and  exercises  its  franchises  only  by 
virtue  of  a  grant  from,  the  legislative  power.  The  grant- 
ing and  acceptance  of  a  charter  in  the  case  of  private 
corporations  for  pecuniary  profit  are  based  on  the  theory 
that  the  prosecution  of  the  business  will  be  a  benefit  to 
the  public,  and  that  the  investment  of  capital  therein  will 
result  in  pecuniary  profit  to  the  stockholders,  and  that  it  is 
an  undertaking  on  the  part  of  the  corporation  and  all  of  its 
stockholders  that,  in  consideration  of  the  grant  of  power, 
the  capital  shall  be  used  for  the  prosecution  of  the  purpose 
named  in  the  charter,  and  no  other.  There  is  also  an  under- 
taking on  the  part  of  the  corporation  with  each  stockholder 
that  the  capital  he  invests  shall  be  put  to  no  other  use 
and  subject  to  no  other  hazard  than  that  contemplated 
by  the  powers  expressed  in  the  charter,  and  that  those 
things  which  are  within  the  scope  or  object  of  the  corpo- 
ration shall  be  done  in  the  manner  pointed  out  in  the 
charter  and  the  laws  governing  its  action.  But  corpora- 
tions and  their  officers  do  not  always  keep  within  their 
powers,  and  the  application  of  the  doctrine  of  ultra  vires 
is  often  attended  with  very  perplexing  questions.  By 
the  application  of  a  few  plain  rules,  however,  we  may 
readily  reach  the  proper  answer  to  the  question  involved 
in  this  case.  (1)  Every  person  dealing  with  a  corpora- 
tion is  charged  with  knowledge  of  its  powers  as  set  out 
in  its  recorded  articles  of  incorporation.  (2)  Where  a 
corporation  exercises  powers  not  given  by  its  charter  it 
violates  the  law  of  its  organization,  and  may  be  proceeded 
against  by  the  state,  through  its  attorney -general,  as  pro- 
vided by  the  statute,  and  the  unanimous  consent  of  all 
the  stockholders  cannot  make  illegal  acts  valid.  The 
state  has  the  right  to  interfere  in  such  case.  (3)  Where 
a  third  party  makes  with  the  officers  of  a  corporation  an 
illegal  contract  beyond  the  powers  of  the  corporation  as 


§  38.]  THE   DOCTRINE   GENERALLY.  53 

shown  b}'  its  charter,  such  third  party  cannot  recover, 
because  he  acts  with  knowledge  that  the  oificers  have  ex- 
ceeded their  power,  and  between  him  and  the  corpora- 
tion or  its  stockholders  no  amount  of  ratification  by  those 
unauthorized  to  make  the  contract  will  make  it  valid. 
(4)  When  the  officers  of  a  corporation  make  a  contract 
with  third  parties  in  regard  to  matters  apparently  within 
their  corporate  powers,  but  which  upon  the  proof  of  ex- 
trinsic facts  (of  which  such  parties  had  no  notice)  lie 
beyond  their  powers,  the  corporation  must  be  held,  unless 
it  may  avoid  liability  by  taking  timely  steps  to  prevent 
loss  or  damage  to  such  third  parties;  for  in  such  cases  the 
third  party  is  innocent,  and  the  corporation  or  stockhold- 
ers less  innocent  for  having  selected  oflBcers  not  worthy 
of  the  trust  reposed  in  them.  ...  (6)  "When  the  cor- 
poration has  permitted  its  officers  to  engage  in  ultra  vires 
transactions,  and  in  the  prosecution  of  such  transactions 
the  officers  commit  a  wrong  or  tortious  act  without  the 
fault  of  the  injured  party,  the  corporation  is  estopped 
from  taking  advantage  of  the  ultra  vires  character  of  the 
original  undertaking.  These  rules  do  not  cover  all  cases, 
but  are  sufficient  to  guide  us  in  the  determination  of  the 
question  in  this  case, 

"  The  case  of  Bissell  v.  Michigan  Southern  c&  ]SF.  I.  B. 
Co.,  22  N".  T.  258,  is  relied  upon  by  appellees  as  authority 
for  holding  corporations  on  iiltra  vires  contracts.  It  is 
true  that  the  opinion  of  Comstock,  J.,  in  that  case,  ap- 
pears not  to  he  in  accord  with  the  loell-estahlished  doctrine 
of  ultra  vires  as  applied  to  corporations',  but  he  saj^'s 
(page  272),  '  I  do  not  deny  the  validity  of  this  excuse  in 
many  cases  —  I  may  say  in  all  cases  where  it  can  be  re- 
ceived without  doing  great  injustice  to  others.  If  the  per- 
son dealing  with  a  corporation  knows  of  the  wrong  done 
or  contemplated,  and  he  cannot  show  the  acquiescence 


54  THE    DOCTRINE    GENERALLY.  [§  38. 

of  the  shareholder,  he  ought  not  to  complain  if  he  cannot 
enforce  the  contract.  Aside  from  the  law  of  corpora- 
tions, agreements  which  involve  or  propose  a  violation  of 
trust  will  not  be  enforced  by  the  courts  where  no  greater 
equities  demand  it.'  In  that  case  the  defendant  had  con- 
structed a  railroad  not  authorized  by  their  charter,  and 
for  some  years  had  been  operating  the  same,  and  made  a 
contract  to  carry  plaintiff  over  the  road.  He  was  injured 
in  a  collision  occasioned  by  the  negligence  of  defendant's 
employees.  The  plaintiff's  cause  of  action  did  not  arise 
out  of  the  ultra  vires  contract  to  carry  him,  but  out  of 
the  wrong  done  on  the  way,  and  to  which  wrong  he  was 
not  a  contributing  party.  This  view  is  consistent  with 
the  sixth  proposition  above,  and  is  the  one  in  which 
Selden,  J.,  sustained  the  right  of  recovery  in  a  very  able 
opinion  in  the  same  case,  and  certainly  in  line  with  well- 
established  authorities^  and  in  support  of  the  doctrine  of 
^iltra  vires,  '^one  of  the  other  judges  sustained  the  views 
of  Comstock,  J. ;  but  all,  except  Denio,  J.,  sustained  the 
right  of  recovery.  A  different  question  would  have  been 
presented  in  that  case  if  the  plaintiff  had  sued  to  recover 
for  failure  of  defendant  to  transport  him  according  to 
agreement. 

"  In  the  case  now  before  us  the  plaintiff  seeks  to  re- 
cover contribution  from  the  corporation  as  co-surety  on 
the  bond  to  the  brewing  company,  and  claims  (1)  that 
the  contract  of  suretyship  was  within  the  defendant's 
corporate  powers;  and  (2)  that,  if  it  were  not  within  de- 
fendant's corporate  powers,  it  had  so  acted  on  the  con- 
tract as  to  now  estop  it  from  pleading  ultra  vires.  It  is 
claimed  that  the  language  of  the  articles  of  incorporation, 
defining  the  business  to  be  '  the  general  freight  and 
transfer  business,  and  such  other  business  as  may  not  be 
inconsistent  therewith,'  is  of  such  a  general  character  as 


I  39.]  THE    DOCTRINE    GENERALLY.  55 

to  cover  almost  any  kind  of  business.  This  position,  it 
seems  to  us,  is  not  tenable,  for  the  language  itself  implies 
that  there  may  be  business  inconsistent  with  the  general 
freight  and  transfer  business.  The  name  of  the  corpora- 
tion indicated  its  principal  business,  and  the  language  is 
equivalent  to  saying  it  may  do  such  other  business  as  is 
consistent  with  the  freight  and  transfer  business.  '  Con- 
sistent '  means  standing  together,  or  in  agreement  with. 
If  the  capital  of  the  company  is  diverted  into  some  other 
line  of  business  entirely  foreign  to  the  freight  and  trans- 
fer business,  it  would  be  to  the  detriment  of,  and  there- 
fore not  consistent  with,  the  latter.  But,  whatever  mean- 
ing may  be  attached  to  the  language  of  the  articles,  it  is 
quite  certain  it  cannot  include  the  contract  of  suretyship 
in  question.  The  simple  act  of  going  security  for  another 
is  out  of  the  line  of  the  prosecution  of  any  business.  It 
is  a  mere  accommodation,  and  it  cannot  be  assumed  that 
the  articles  gave  the  officers  of  defendant  any  power  to 
jeopardize  its  capital  in  any  such  venture.     .     .     . 

"  It  seems  to  us  clear  that  the  corporation  defendant 
bad  no  power  to  make  the  contract  of  suretyship  in  ques- 
tion; and,  for  the  same  reason,  it  is  just  as  clear  that  the 
officers  of  the  corporation  had  no  power  to  sign  the  let- 
ter of  May  27,  purporting  to  assume  the  payment  of  the 
amount  stipulated  in  the  bond.  Both  instruments,  so  far 
as  the  defendant  was  concerned,  were  illegal  and  void, 
and  no  attempted  ratification  by  parties  having  no  power 
to  make  the  original  contract  could  make  it  valid,  no 
matter  how  often  such,  attempts  were  made." 

§  39.  The  doctrine  as  construed  %  JEnglisTi  courts — 
Colman  v.  Eastern  Counties  By.  Co.,  10  Beav.  1  {18^B). 
The  first  reported  case  touching  the  application  of  the 
doctrine  of  ultra  vires  in  England  was  the  case  of  CoU 


5G  THE    DOCTRINE    GENERALLY.  [§  39. 

rnan  v.  Eastern  Counties  Ry.  Co.,  supra,  where  the  ques- 
tion arose  on  a  motion  to  dissolve  a  special  injunction. 
The  directors  of  a  railway  company,  for  the  purpose  of 
increasing  the  traffic,  proposed  to  guaranty  certain  profits 
and  to  secure  the  capital  of  an  intended  steam  packet 
company,  who  were  to  act  in  connection  with  the  rail- 
way. It  was  held  that  such  a  transaction  was  not  within 
their  powers,  and  they  were  restrained  and  the  injunc- 
tion made  perpetual.  The  Master  of  the  Eolis,  in  his  opin- 
ion, said: 

"  Joint-stock  companies  have  funds  so  extensively  large 
and  exercise  powers  so  extensive  and  so  materially  affect- 
ing the  rights  and  interests  of  other  persons  and  rights 
which  the  public  or  the  subjects  which  her  majesty  have 
been  accustomed  to  enjoy  under  the  protection  of  the 
laws  established  in  this  kingdom,  that  to  look  upon  a 
railway  company  in  the  light  of  a  common  partnership, 
and  as  subject  to  no  greater  vigilance  than  common  part- 
nerships are,  would,  I  think,  be  greatly  to  mistake  the 
functions  which  they  perform,  and  the  powers  which 
they  exercise  of  interference  not  only  with  the  public, 
but  the  private  rights  of  all  individuals  in  this  realm. 
We  are  to  look  upon  these  powers  as  given  them  in  con- 
sideration for  the  benefit  which,  notwithstanding  all  other 
sacrifices,  it  is  to  be  presumed  and  hoped,  on  the  whole, 
will  be  obtained  by  the  public.  But  it  being  to  the  in- 
terest of  the  public  to  protect  the  private  rights  of  all 
individuals,  and  to  defend  them  from  all  liabilities  be- 
yond those  necessarily  occasioned  by  the  powers  given 
by  the  several  acts,  those  powers  must  always  be  care- 
fully looked  to;  and  I  am  clearly  of  opinion  that  the 
powers  which  are  given  by  acts  of  parliament,  like  that 
now  in  question,  extend  no  further  than  is  expressly 
stated  in  the  act,  or  is  necessarily  or  properly  required 


§  40.]  THE   DOOTEINE   GENERALLY.  57 

for  carrying  into  effect  the  undertaking  and  works  which 
the  act  has  expressly  sanctioned.  ...  It  has  been 
stated  that  these  things,  to  a  small  extent,  have  frequently 
been  done  since  the  establishment  of  railways  j  but,  un- 
less the  acts  so  done  can  be  proved  to  be  in  conformity 
with  the  powers  given  by  the  special  acts  of  parliament 
under  which  these  acts  are  done,  they  furnish  no  au- 
thority. To  suppose  that  the  acquiescence  of  railway 
shareholders  for  the  last  fifteen  years,  in  any  transaction 
conducted  by  a  railway  company,  is  any  evidence  what- 
ever of  their  having  a  lawful  right  to  enter  into  it,  is,  I 
think,  wholly  to  forget  the  sort  of  frenzy  which,  during 
that  period,  the  country  has  been  in.  ...  I  must,  in 
the  absence  of  any  legal  decision,  say  that  I  consider  that 
the  acquiescence  of  the  shareholders  in  such  transactions 
affords  no  ground  whatever  for  the  presumption  of  their 
legality." 

§  40.  East  Anglian  By.  Co.  v*  JEastern  Counties  Ry. 

Co.,  11  C.  B.  775  {186^).— The  question  arose  in  this  case 
on  an  action  of  covenant  wherein  the  defendant,  by  an 
indenture  under  their  common  seal  between  themselves 
and  the  plaintiff,  agreed  to  take  a  lease  of  their  railways 
upon  certain  terms  mentioned  in  the  indenture,  and  to 
find  the  capital  necessary  for  the  construction  of  the  ex- 
tensions, branches  and  works  authorized  to  be  constructed 
by  the  bills  then  pending  in  parliament,  and  to  pay  the 
costs  of  preparing  and  promoting  such  bills,  whether  the 
same  should  pass  into  a  law  or  not.  The  declaration  fur- 
ther stated  that  the  bills  were  proceeded  with,  and  two 
were  passed,  and  that  the  cost  of  the  bills,  amounting  to  a 
large  sum,  had  not  been  paid  by  the  defendants  to  the 
plaintiffs.  It  was  held  that  it  was  not  competent  for  the 
directors  to  enter  into  a  contract  with  another  railway 


58  THE   DOCTKINE   GENERALLY.  [§  41. 

company  to  take  a  lease  of  their  line,  and  to  pay  the 
costs  incurred  by  them  in  the  soliciting  and  promoting  of 
bills  in  parliament  for  the  enterprise  and  improvement 
of  such  other  line  of  railway,  even  though  such  extension 
and  improvement  would  benefit  their  own  company ;  and 
that  such  a  contract,  if  entered  into,  was  illegal  and  void, 
a-nd  could  not  be  enforced  in  a  court  of  law.  Chief  Jus- 
tice Jervis,  in  delivering  judgment,  said : 

"  This  act  (6  and  7  W.  4,  ch.  cvi)  is  a  public  act,  acces- 
sible to  all,  and  supposed  to  be  known  to  all,  and  the 
plaintiffs  must  therefore  be  presumed  to  have  dealt  with 
the  defendants  with  a  full  knowledge  of  their  respective 
rights,  vrhatever  those  rights  may  be.  .  .  .  Every 
proprietor  when  he  takes  shares  has  a  right  to  expect 
that  the  conditions  upon  which  the  act  was  obtained  will 
be  performed,  and  it  is  no  sufficient  answer  to  a  share- 
holder, expecting  his  dividend,  that  the  money  has  been 
expended  upon  an  undertaking  which,  at  some  remote 
period,  may  prove  highly  beneficial  to  the  line,  ,  .  . 
If  the  contract  is  illegal,  as  being  contrary  to  the  act  of 
parliament,  it  is  unnecessary  to  consider  the  effect  of  dis- 
sentiate  shareholders ;  for  if  the  company  is  a  corporation 
only  for  a  limited  purpose,  and  a  contract  like  that  under 
discussion  is  not  within  their  authority,  the  assent  of  all 
the  shareholders  to  such  a  contract,  though  it  may  make 
them  all  personally  liable  to  perform  such  contract,  would 
not  bind  them  in  their  corporate  capacity  or  render  liable 
their  corporate  funds.  .     .     It  is  not  within  the  scope 

authorized  by  the  company  as  a  corporation  and  is  there- 
fore void." 

§  41.  Ashhury  %.  Co.  v.  Biche,  7  H.  L.  653  {187S).— 
The  case,  however,  most  frequently  quoted,  and  the  one 
wherein  the  doctrine  of  ultra  vires  is  most  exhaustively 


§.  41.]  THE   DOCTRINE   GENERALLY.  59 

considered  and  discussed  and  the  question  finally  set  at 
rest  in  England,  came  before  the  House  of  Lords  on  appeal 
from  the  Court  of  Exchequer  in  1875.  That  was  the  cele- 
brated case  of  Ashhury  Hy.  Co.  v.  Riche.  The  facts 
in  that  case  were  about  these :  A  company  was  registered 
under  the  Joint-stock  Companies  Act  of  1863.  Its  ob- 
jects, as  stated  in  the  memorandum  of  association,  were : 
"  To  make  and  sell,  or  lend  on  hire,  railway  carriages 
and  wagons,  and  all  kinds  of  railway  plant,  fittings,  ma- 
chinery and  rolling-stock;  to  carry  on  the  business  of 
mechanical  engineers  and  general  contractors^  to  pur- 
chase, work,  lease  and  sell  mines,  minerals,  land  and  build- 
ings; to  purchase  and  sell,  as  merchants,  timber,  coal, 
metals  or  other  materials,  and  to  buy  and  sell  any  such 
materials  on  commission  or  as  agents."  The  directors 
agreed  to  purchase  a  concession  for  making  a  railway  in 
a  foreign  country,  and  afterwards  (on  account  of  difficul- 
ties existing  by  the  law  of  that  country)  agreed  to  con- 
sign the  concession  to  a  societe  anonyme  formed  in  that 
country,  which  societe  was  to  supply  the  materials  for  the 
construction  of  the  railway,  and  to  receive  periodical  pay- 
ments from  the  English  company.  It  was  held  that  this 
contract,  being  of  a  nature  not  included  in  the  memo- 
randum of  association,  Avas  ultra  vires  not  only  of  the 
directors  but  of  the  whole  company,  so  that  even  the  sub- 
sequent assent  of  the  whole  body  of  shareholders  would 
have  no  power  to  ratify  it. 

As  this  is  the  principal  case  and  the  leading  decision 
upon  which  is  founded  the  doctrine  of  idtra  vires  in  Eng- 
land, it  is  considered  of  sufficient  importance  to  take  up 
some  space  in  freely  quoting  from  the  opinions  there  de- 
livered. 

The  Lord  Chancellor  (Lord  Cairns),  in  the  course  of  his 
elaborate  opinion,  said :  "  The  provisions  under  which  that 


60  THE   DOCTltlNE   GENERALLY.  [§  41. 

system  of  limiting  liability  was  inaugurated  were  pro- 
visions not  merely,  perhaps  I  might  say  not  mainly,  for 
the  benefit  of  the  shareholders  for  the  time  beino;  in  the 
company,  but  were  enactments  intended  also  to  provide 
for  the  interests  of  two  other  very  important  bodies;  in 
the  first  place,  those  who  might  become  shareholders  in 
succession  to  the  persons  who  were  shareholders  for  the 
time;  and  secondly,  the  outside  public,  and  more  par- 
ticularly those  who  might  be  creditors  of  companies  of 
this  kind.  And  I  will  ask  your  lordships  to  observe,  as  I 
refer  to  some  of  the  clauses,  the  marked  and  entire  dif- 
ference between  the  two  documents  which  form  the  title 
deeds  of  companies  of  this  description.  I  mean  the 
memorandum  of  association  on  the  one  hand  and  the 
articles  of  association  on  the  other  hand.  With  regard 
to  the  memorandum  of  association,  your  lordships  will 
find,  as  has  often  already  been  pointed  out,  although  it 
appears  somewhat  to  have  been  overlooked  in  the  present 
case,  that  that  is,  as  it  were,  the  charter,  and  defines  the 
limitations  of  the  powers  of  a  company  to  be  established 
under  the  act.  AYith  regard  to  the  articles  of  association, 
those  articles  play  a  part  subsidiary  to  the  memorandum 
of  association.  They  accept  the  memorandum  of  associa- 
tion as  the  charter  of  incorporation  of  the  company,  and, 
so  accepting  it,  the  articles  proceed  to  define  the  duties, 
the  rights  and  the  powers  of  the  governing  body  as  be- 
tween themselves  and  the  company  at  large,  and  the 
mode  and  form  in  which  changes  in  the  internal  regula- 
tion  of  the  company  may  from  time  to  time  be  made. 
With  regard,  therefore,  to  the  memorandum  of  associa- 
tion, if  you  find  anything  which  goes  beyond  their  memo- 
randum, or  is  not  warranted  by  it,  the  question  will  arise 
whether  that  which  is  so  done  is  idtra  vires  not  only  of 
the  directors  of  the  company,  but  of  the  company  itself. 


§  41.]  THE    DOCTEINE    GENERALLY.  01 

"With  regard  to  the  articles  of  association,  if  you  find  any- 
thing^ which,  still  keeping  within  the  memorandum  of 
association,  is  a  violation  of  the  articles  of  association,  or 
in  excess  of  them,  the  question  will  arise  whether  that  is 
anything  more  than  an  act  extra  vires  the  directors,  but 
intra  vires  the  company.  In  a  case  such  as  that  which 
your  lordships  have  now  to  deal  with,  it  is  not  a  question 
whether  the  contract  sued  upon  involves  that  which  is 
malum  jprohihitum  or  malum  in  se,  or  is  a  contract  con- 
trary to  public  policy  and  illegal  in  itself.  I  assume  the 
contract  in  itself  to  be  perfectly  legal,  to  have  nothing  in 
it  obnoxious  to  the  doctrine  involved  in  the  expressions 
which  I  have  used.  The  question  is  not  as  to  the  legality 
of  the  contract;  the  question  is  as  to  the  competency  and 
power  of  the  company  to  make  the  contract.  Now  I 
am  clearly  of  opinion  that  this  contract  was  entirely,  as 
I  have  said,  beyond  the  objects  in  the  memorandum  of 
association.  If  so,  it  was  thereby  placed  beyond  the 
powers  of  the  company  to  make  the  contract.  If  so,  my 
lords,  it  is  not  a  question  whether  the  contract  ever  was 
ratified  or  was  not  ratified.  If  it  was  a  contract  void  at 
the  beginning,  it  was  void  because  the  company  could 
not  make  the  contract.  If  every  shareholder  of  the  com- 
pany had  been  in  the  room,  and  every  shareholder  of  the 
company  had  said:  'That  is  a  contract  which  we  desire 
to  make,  which  we  authorize  the  directors  to  make,  to 
which  we  sanction  the  placing  the  seal  of  the  company,' 
the  case  would  not  have  stood  in  any  different  position 
from  that  in  which  it  stands  now.  The  shareholders 
would  thereby,  by  unanimous  consent,  have  been  attempt- 
ing to  do  the  very  thing  which,  by  the  act  of  parliament, 
they  were  prohibited  from  doing." 

And  Lord  Chelmsford,  in  the  same  case,  in  delivering  his 
opinion,  used  the  following  language :  "  Now,  the  incor- 


62  THE   DOCTKINE   GENERALLY.  [§  41. 

poration  of  a  company  with  limited  liability  is  entirely  a 
creature  of  the  statute.  It  was  necessary  not  only  for 
the  protection  of  those  who  might  join  such  companies, 
but  also  of  persons  who  might  enter  into  contracts  with 
them,  that  the  privilege  of  creating  them  should  only  be 
obtained  upon  certain  conditions  which  should  be  made 
known  to  the  public.  The  legislature,  therefore,  required 
that  the  objects  for  which  the  proposed  company  was  to 
be  established  should  be  contained  in  the  memorandum 
of  association,  which,  when  signed  and  registered,  is  to 
establish  the  incorporated  company.     .     .     . 

"  The  real  description  of  the  contract  entered  into  by 
the  company  is  an  engagement  to  supply  the  contractors 
for  the  construction  of  a  foreign  railway  with  the  funds 
necessary  to  enable  them  to  execute  their  contract.  This 
is  clearly  not  within  any  of  the  objects  described  in  the 
memorandum  of  association,  and  the  contract  was  ultra 
vires,  and  therefore  not  voidable  merely,  but  absolutely 
void.  The  learned  counsel  for  defendant  in  error,  after 
arguing  against  the  conclusion  that  the  contract  was  ultra 
vires,  contended  that  the  contract  having  been  in  part 
performed,  and  the  money  of  the  company  having  been 
paid  in  respect  of  it,  the  shareholders,  in  order  to  have 
the  benefit  of  their  money  so  misapplied,  had  a  right  to 
abstain  from  objecting  to  the  contract  which  might  then 
be  enforced  against  the  directors.  '  Because,'  he  said,  '  the 
Companies  Act,  though  it  prohibits  the  contract  being 
entered  into,  does  not  say,  if  the  directors  have  made 
such  a  prohibited  contract,  what  the  stockholders  may  do 
with  it.' 

"This  argument  is  really  directed  to  the  question 
whether  the  contract  was  capable  of  being  ratified  by  the 
shareholders.  ...  I  have  already  observed  that  the 
contract  entered  into  by  the  company  with  Messrs.  Riche 


§  41.]  THE   DOCTRINE   GENERALLY.  63 

Avas  not  a  voidable  contract  merely,  but,  being  in  viola- 
tion of  the  prohibition  contained  in  the  Companies  Act, 
was  absolutely  void. 

"  It  is  exactly  in  the  same  condition  as  if  no  contract 
at  all  had  been  made,  and  therefore  a  ratification  of  it  is 
not  possible.  If  there  had  been  an  actual  ratification  it 
could  not  have  given  life  to  a  contract  which  had  no 
existence  in  itself;  but  at  the  utmost  it  would  have 
amounted  to  a  sanction  by  the  shareholders  to  the  act  of 
the  directors,  which,  if  given  before  the  contract  was  en- 
tered into,  would  not  have  made  it  valid,  as  it  does  not 
relate  to  an  object  within  the  scope  of  the  memorandum 
of  association." 

And  says  Lord  O'Hagan  in  the  same  case:  "Having, 
therefore,  no  doubt  that  the  action  of  this  company  was 
ultra  vires,  I  confess  I  have  as  little  that  there  was  no 
valid  ratification  of  the  impeached  contract.  Again,  we 
must  keep  in  mind  the  purpose  of  the  legislation  with 
which  we  are  dealing.  It  was,  as  I  have  said,  to  give  a 
privilege  upon  a  condition ;  and  the  privilege  was  to  be 
enjoyed  upon  the  terms  and  with  the  limitations  indicated 
in  the  memorandum  of  association.  The  memorandum, 
when  put  on  record,  was  to  be  for  contractors,  for  cred- 
itors, and  for  all  the  world,  a  reliable  description  of  the 
exact  character,  purposes  and  powers  of  the  company 
described  in  it.  And  the  admission  of  an  authority  in 
shareholders  to  warrant  anything  inconsistent  with  that 
charter,  antagonistic  to  those  purposes  and  beyond  those 
powers  (and  in  this  case  it  was  so  undoubtedly),  would 
seem  to  encourage  evasion  of  the  statute  to  abrogate  the 
condition  whilst  continuing  the  privilege,  and  so  to  give 
the  benefit  without  the  burden.  By  the  memorandum 
the  general  community  is  to  judge  of  the  association;  but 
how  can  that  be  so  if  shareholders,  proposing  to  bind  the 


64:  THE   DOCTKINE   GENERALLY.  [§  42. 

corporation  by  resolution,  perhaps  effective  between  the 
shareholders  themselves,  altogether  ignore  that  memo- 
randum, and  authorize  dealings  quite  beyond  the  scope  of 
its  contemplation?  It  is  plain  that  if  the  ratification  for 
which  the  defendant  in  error  contends  could  validly  affirm 
the  contract  on  which  he  relies,  there  is  no  amount  of 
divergence  from  the  original  object  of  the  company 
which  might  not  have  been  approved,  no  extension  of  the 
limits  prescribed  by  the  memorandum  which  might  not 
have  been  effected  by  a  single  resolution  of  all  the  stock- 
holders. And  if  this  be  so,  I  cannot  think  that  a  conclu- 
sion pregnant  with  consequences  so  very  serious  can  prop- 
erly be  sustained.  It  is  not  warranted  by  the  statute, 
which  equally  condemns  it  by  affirmative  and  negative 
provisions;  and  any  such  ratification,  if  relied  on,  being 
in  clear  contravention  of  the  purpose  and  the  letter  of  the 
law,  should,  in  my  opinion,  be  held  void  and  illegal." 

§42.  Attorney-General  V.  Great  Eastern  Bif.  Co.,5  App. 

Cas.  p3  {1880).—  Extracts  from  this  and  the  following 
English  cases  are  made  for  the  purpose  of  showing  that 
the  rule  of  construction  adopted  in  the  RicJie  Case,  supra, 
relative  to  the  doctrine  of  xdtra  vires,  has  been  strictly 
adhered  to,  and  is  the  accepted  application  of  the  doctrine 
in  that  country.  In  this  case  the  Lord  Chancellor  (Lord 
Selborne)  says,  among  other  things :  "  I  assume  that  your 
lordships  will  not  now  recede  from  anything  that  was 
determined  in  Ashhury  Ry.  Co.  v.  Riclie:  it  appears  to 
me  to  be  important  that  the  doctrine  of  ultra  vires  as 
it  was  explained  in  that  case  should  be  maintained.  But 
I  agree  with  Lord  Justice  James  that  this  doctrine  ought 
to  be  reasonably  and  not  unreasonably  understood  and 
applied,  and  that  whatever  may  be  fairly  regarded  as  in- 
cidental to  or  consequential  upon  those  things  which  the 


§§  43,  44.]  THE    DOCTRINE    GENERALLY.  65 

legislature  has  authorized  ought  not  (unless  expressly  pro- 
liibited)  be  held  by  judicial  construction  to  be  ultima  vires.'" 
And  Lord  Blackburn,  in  the  same  case,  said:  "That  case 
appears  to  me  to  decide  at  all  events  this:  that  where 
•there  is  an  act  of  parliament  creating  a  cor])oration  for  a 
particular  purpose,  and  giving  it  powers  for  that  particu- 
lar purpose,  what  it  does  not  expressly  or  impliedly  au- 
thorize is  to  be  taken  as  prohibited.  .  .  .  Those  things 
which  are  incident  to  and  may  reasonably  and  properly 
be  done  under  the  main  purpose,  though  they  may  not  be 
literally  within  it,  would  not  be  prohibited." 

§  43.  Small  et  al  v.  Smith  et  al,  10  App.  Gaa.  119  {188 Ji). 
In  this  case  the  Earl  of  Selborne,  L.  C,  observed :  "  ISTow 
I  entirely  adhere  to  what  was  said  in  this  House  in  the 
case  of  Attorney- General  v.  Great  Eastern  Ry.  Co..,  5  App. 
Cas.  473,  that  when  you  have  got  a  main  purpose  ex- 
pressed and  ample  authority  given  to  effect  that  main 
purpose,  things  which  are  incidental  to  it  and  which  may 
reasonably  and  properly  be  done,  and  against  which  no 
express  prohibition  is  found,  may  and  ought  prima  facie 
to  follow  from  the  authority  for  effectuating  the  main 
purpose  by  proper  and  general  means.  I  think  it  quite 
right  to  notify  your  lordships  to  apply  that  principle  to 
the  present  case.  In  order  to  see  how  it  applies  we  must 
ascertain  first  of  all  what  the  main  purpose  here  is,  then 
what  are  the  general  powers  of  the  directors,  then  what 
are  the  special  powers,  and  then,  supposing  that  this  is 
not  within  the  natural  meaning  of  these  general  powers 
or  of  these  special  powers,  whether  it  can  be  brought  in 
as  incidental  to  the  main  purpose,  and  a  thing  reasonably 
to  be  done  for  effectuating  it." 

§  44.  Baroness  Wenlocl:,  etc.  v.  The  River  Dee,  10  App. 
€as.  35 Jf  {1886). —  Lord  Watson,  in  this  case,  where  the 
5 


GQ  .  THE    DOCTRINE    GENERALLY.  [§  45. 

question  was  as  to  the  power  of  borrowing  money,  used 
the  following  language:  "Whenever  a  corporation  is- 
created  by  an  act  of  parliament  with  reference  to  the 
purpose  of  the  act  and  solely  with  a  view  for  carrying 
those  purposes  into  execution,  I  am  of  the  opinion  not 
only  that  the  objects  which  the  corporation  may  legiti- 
mately pursue  must  be  ascertained  from  the  act  itself, 
but  that  the  poAvers  which  a  corporation  may  lawfully 
use  in  pursuance  of  these  object  must  either  be  expressly 
conferred  or  derived  by  reasonable  implication  from  it& 
provisions.  That  appears  to  me  to  be  the  principal 
recognized  by  this  House  in  AsKbury  Co.  v.  Biche  and 
in  Attorney- General  v.  Great  Eastern  Ry.  CoP 

§  45.  Trevor  et  al.  v.  Whitivortli  et  al,  12  Ajpj).  Cas. 
Jf09  {1887). —  In  passing  upon  the  power  of  a  corporation 
to  purchase  its  own  stock,  Lord  Herchell,  in  this  case, 
said :  "  It  cannot  be  questioned  since  the  case  of  Ashhury 
Co.  V.  Riche  that  a  company  cannot  employ  its  funds  for 
the  purpose  of  any  transactions  which  do  not  come  within 
the  objects  specified  in  the  memorandum,  and  that  a 
company  cannot,  by  its  articles  of  association,  extend  its 
powers  in  this  respect.  .  .  .  But  it  is  to  be  observed 
that  at  that  time  it  was  not  so  clearly  settled  as  it  has 
been  since  the  judgment  in  AsKbury  Ry.  v.  Riche  that  a 
transaction  not  within  the  scope  of  the  memorandum  is 
incapable  of  ratification." 


CHAPTEK  III. 

CONTRACTS  OF  CORPORATIONS. 
THE   DOCTKINE   APPLIED   TO   CONTRACTS    GENEEALLT. 

§  46.  Introductory. 

47.  Application  of  doctrine  to  contracts  generally. 

48.  Province  of  court  in  applying  doctrine. 

49.  Tendency  of  courts  to  disregard  statutory  enactments. 

50.  As  to  incidental  contractual  powers. 

51.  Irregularity  no  defense  to  liability  on  corporate  contract. 

52.  When   charter  prescribes  mode  of  contracting,  it  must  be 

strictly  pursued. 

53.  All  persons  bound  to  take  notice  of  limits  of  corporate  power. 

54.  Why  corporations  not  liable  on  ultra  vires  contracts. 

55.  Distinction  between  ultra  vires  and  illegal  contracts. 

56.  Prohibited  contracts  regarded  as  illegal  and  void. 

57.  Unauthorized  contracts  none  the  less  illegal  because  ignored 

by  courts. 

§  46.  Introductory. —  "While,  as  a  general  rule,  the  ap- 
plication of  the  doctrine  of  ultra  vires  to  corporate  con- 
tracts has  been  comparatively  uniform  in  this  country 
when  the  question  has  been  squarely  presented  to  the 
court,  yet  there  has  been  a  distinction  made  by  some  of 
the  state  courts  in  its  application  to  executory  contracts 
and  to  those  that  have  been  partially  or  wholly  performed 
by  one  or  the  other  of  the  parties.  It  is  plainly  appar- 
ent, however,  that  this  lack  of  uniformity  is  not  from 
any  want  of  soundness  in  the  doctrine  itself,  but  rather 
from  a  lack  of  proper  diligence  and  a  more  thorough  in- 
vestigation by  the  court  called  upon  to  decide  the  merits 
or  demerits  of  the  doctrine  in  its  application  to  the  par- 


6S  CONTKACTS  OF  CORPORATIONS.  §  4:7. 

ticular  case  under  consideration;  on  such  occasions  the 
defense  being  usually  denied  on  the  broad  ground  that 
it  would  be  "  unjust,  inequitable  and  unconscionable." 
And  it  is  a  fact  easy  of  verification  by  an  earnest  inves- 
tigator, that  the  most  soothing  axioms  relative  to  this 
doctrine  —  axioms  whose  rhythmic  measures  strike  the  ear 
of  equity  like  unto  the  lascivious  pleasings  of  the  lute  — 
have  been  evolved  by  a  reminiscent  court  on  occasions 
vrhen  the  defense  of  ultra  vires  had  not  been  earnestly 
urged,  nor  could  it  properly  be  applied  in  deciding  the 
question  submitted  for  the  court's  adjudication.  It  is  a 
further  fact  worthy  of  mention,  that  these  very  musical 
maxims,  conceived  by  a  consenting  court  without  legiti- 
mate connection,  and  brought  forth  at  a  period  of  con- 
vulsive irregularity  before  proper  reflection  had  wrought 
maturity,  are  the  very  phrases  most  generally  quoted  by 
those  of  both  bench  and  bar,  whose  equitable  consciences 
are  so  supersensitive  as  to  shrink  from  even  the  plainest 
rules  of  elementary  law. 

§47.  AppUcation  of  doctrine  to  contracts  generally. — 
It  is  now  the  well-established  rule  that  a  corporation  can 
make  no  contracts,  either  within  or  without  the  state 
which  created  it,  except  such  as  are  authorized  by  its 
charter  or  law  of  creation,^     The  doctrine  of  ultra  vires, 

1  Bank  of  Augusta  v.  Earle,  13  Pet.  (U.  S.)  588:  Talmage  v.  North 
Amer.  Coal  Co.,  3  Head  (Tenn.).  337;  Thomas  v.  Railroad  Co.,  101 
U.  S.  71;  Pittsburg,  etc.  R.  Co.  v.  Keokuk  Bridge  Co.,  131  U.  S.  385; 
Green  Bay,  etc.  Co.  v.  Steamboat  Co..  107  U.  S.  100;  Davis  v.  Old 
Colony  R.  Co.,  131  Mass.  258;  Whitman  Gold  M.  Co.  v.  Baker,  3  Nev. 
383;  Louisiana  State  Bank  v.  Orleans  Nav.  Co.,  3  La.  Ann.  294;  Bal- 
timore T.  Baltimore,  etc.  R.  Co.,  21  Md.  50;  Petersburg!!  v.  Metzker, 
21  111.  205;  Jacksonville  v.  McConnel,  12  id.  138;  Kinzie  v.  Chicago, 
3  id.  187;  Smith  v.  Eureka  Flour  Mills,  6  Cal.  1;  McMasters  v.  Reed, 
1  Grant  Cas.  (Pa.)  36;  Straus  v.  Eagle  Ins.  Co.,  5  Ohio  St.  59;  Wliite's 
Bank  v.  Toledo  Ins.  Co.,  12  id.  601;  Downing  v.  Mt.  Washington  R. 


§  48.]  CONTRACTS  OF  COKPORATIONS.  G9 

however,  in  its  relation  to  contracts  of  corporations, 
should  be  properly  and  reasonably  applied;  and  what- 
ever may  be  fairly  regarded  as  incidental  to  and  conse- 
quential upon  those  things  which  are  authorized  by  the 
charter  of  the  company,  ought  not,  unless  expressly  pro- 
hibited, be  held  by  judicial  construction  to  be  ultra  vires} 

§48.  Province  of  court  in  applying  doctrine. —  The 
court,  however,  in  the  exercise  of  a  sound  discretion  in. 
the  application  of  this  doctrine,  should  not  seek  to  enlarge 
the  domain  of  judicial  speculation  beyond  the  bounds  of 
legitimate  inquiry,  and  predicate  its  judgment  upon  what 
would  seem,  from  lack  of  cited  authority,  a  wise  discre- 
tion alone,  regardless  of  the  provisions  of  the  charter  or 
the  laws  under  which  the  corporation  was  organized, 
which  are  the  sources  of  corporate  powers.  For  it  is  not 
the  province  of  the  court,  it  is  submitted,  to  indulge  in 
hypothetical  speculation  concerning  a  given  question, 
when  it  has  been  squarely  settled  by  legislation.  The 
doctrine  of  ultra  vires  was  evolved  for  no  other  purpose 
than  that  of  restricting  corporations  in  their  transactions 
to  those  acts  and  contracts  with  which  their  creator 
thought  fit  and  proper  to  endow  them.  The  defense  of 
ultra  vires  is  only  the  means  used  to  arrive  at  the  desired 
end.  If  a  Derson  make  a  contract  which  is  contrary  to 
law,  it  w^ould  seem  but  a  simple  matter  to  so  declare  it, 
and  pronounce  it  void  and  of  no  effect.  In  an  action  on 
such  a  contract,  the  contract  itself  is  the  strongest  pos- 
sible evidence  that  the  law  has  been  violated;  and  why 

Co.,  40  N.  H.  230:  Beatty  v.  Insurance  Co.,  2  John.  (N.  Y.)  109;  Beaty 
V.  Knowler,  4  Pet.  (U.  S.)  152;  State  v.  Stebbins,  1  Stew.  (Ala.)  299; 
Head  v.  Providence  Ins.  Co.,  2  Cranch  (U.  S.).  127. 

lAttorney-General  v.  Great  Eastern  Ry.,  5  App.  Cas.  473;  Ellerman 
V.  Chicago,  etc.  Co.,  49  N.  J.  Eq.  217,  and  cases  cited  in  preceding 
note. 


70  CONTKACTS  OF  CORPORATIONS.  [§  49. 

an  inquiry  into  the  relative  conditions  of  the  parties  to  it? 
Courts  should  take  contracts  as  they  find  them,  and  not 
presume  to  attempt  to  make  a  new  and  different  contract 
founded  on  the  relative  conditions  and  standing  of  the 
parties  at  the  time  of  adjudication.  Neither  is  it  the 
province  of  the  court,  if  a  statute  be  clear  and  unambigu- 
ous, to  say  that  it  means  something  entirely  different  from 
that  expressed.  Corporations  are  very  often  prohibited, 
either  directly  or  by  necessary  implication,  from  doing 
certain  acts  or  making  certain  contracts,  in  which  case 
the  court  should  dismiss  from  its  consideration  any  con- 
jecture as  to  the  reason  or  right  of  the  legislature  in  en- 
acting a  particular  statute,  unless  its  constitutionality  be 
directly  attacked,  and  only  lend  its  aid  and  guidance  to- 
wards enforcing  a  compliance  with  the  provisions  of  the 
law  as  they  stand.  It  is  the  province  and  duty  of  the 
court,  to  be  sure,  to  construe  the  meaning  of  doubtful 
and  ambiguous  terms,  and  to  let  the  light  of  its  judicial 
wisdom  shine  upon  the  dark  and  obscure  passages  in  the 
laws,  occasioned  perhaps  by  legislative  laxity  or  ill-ad- 
vised haste ;  but  when  the  provisions  of  a  statute  are  cer- 
tain and  their  meaning  plain,  to  seek  to  evade  or  disregard 
their  true  import  because  they  may  be  contrary  to  the 
preconceived  notions  of  the  court  as  to  established  prin- 
ciples of  equity  and  justice  is  certainly  stretching  the 
"discretion"  of  the  court  beyond  the  pale  of  judicial 
dignity. 

§49.  Tendency  of  courts  to  disregard  statutory  enact- 
ments.—  This  tendency  of  the  courts  to  seek  to  evade  the 
plain  provisions  of  a  statute  has  been  remarked  and  com- 
mented upon  by  a  master  mind.  Mr.  Sedgwick,  in  his 
admirable  work  on  Construction  of  Statutes,  says :  "  It 
seems  to  me  difficult  to  deny  that  the  practice  of  sanction- 


§  49.]  CONTRACTS  OF  CORPOKATIONS.  71 

ing  the  evasion  or  disregard  of  statutes,  which  we  have 
had  occasion  to  notice  in  the  cases  thus  examined,  has 
been  carried  beyond  the  line  of  sound  discretion.  This 
idea  has  been  repeatedly  expressed :  '  I  am  not  very  well 
satisfied  with  the  summary  mode  of  getting  rid  of  a  stat- 
utory provision  by  calling  it  directory,'  says  Hubbard,  J., 
in  the  supreme  court  of  Yermont.  '  If  one  positive  re-  • 
quirement  and  provision  of  a  statute  may  be  avoided  in 
that  way,  I  see  no  reason  why  another  may  not.'  {Briggi^ 
V.  Georgia,  15  Yt.  61,  Y2.)  It  is  equally  obvious,  how- 
ever, that  serious  evils  are  sure  to  result  from  a  latitude 
of  construction  so  considerable  as  we  find  to  exist ;  and 
I  therefore  attempt,  with  great  deference  for  the  able  and 
learned  magistrates  who  are  practically  engaged  in  the 
administration  of  justice,  to  frame  the  following  rules  as 
those  which  ought  to  govern  in  this  department  of  our 
science: 

"  The  intention  of  the  legislature  should  control  abso- 
lutely the  action  of  the  judiciary;  where  that  intention 
is  clearly  ascertained,  the  courts  have  no  other  duty  to 
perform  than  to  execute  the  legislative  will  without  any 
regard  to  their  own  views  as  to  the  wisdom  or  justice  of 
the  particular  enactment.  The  means  of  ascertaining 
that  intention  are  to  be  found  in  the  statute  itself,  taken 
as  a  whole  and  with  all  its  parts,  in  statutes  on  the  same 
subject,  antecedent  jurisprudence  and  legislation,  contem- 
poraneous and  more  recent  exposition,  judicial  construc- 
tion and  usage ;  and  to  the  use  of  these  means,  and  these 
alone,  the  judiciary  is  confined.  No  other  extrinsic  facts 
are  in  any  way  to  be  taken  into  consideration.  It  is  not 
until  these  means  fail,  and  until  the  attempt  to  ascertain 
the  legislative  intent  is  hopeless,  that  the  judiciary  can 
with  propriety  assume  any  power  of  construing  a  statute, 
strictly  or  liberally,  with  reference  either  to  the  particu- 


72  CONTRACTS  OF  COKPOEATIONS.  [§  50^ 

lar  character  of  the  statute,  or  to  their  own  ideas  of  pol- 
icy or  equity.  Where  the  meaning  of  a  statute  as  it 
stands  is  clear,  they  have  no  power  to  insert  qualifica- 
tions, engraft  exceptions,  or  make  modifications  under 
the  idea  of  providing  for  cases  in  regard  to  which  the 
legislature  has  omitted  any  specific  provisions. 

"  In  cases  where  the  intent  of  the  legislature  is  ambigu- 
ous, and  the  effort  to  arrive  at  it  is  hopeless,  and  in  these 
cases  only,  does  the  power  of  construing  a  statute  strictly 
or  liberally  exist ;  and  in  regard  to  its  exercise,  as  of  dis- 
cretionary power  generally,  no  other  rule  can  be  laid 
down  than  that  it  must  be  exerted  under  the  guidance  of 
learning,  fidelity  and  j^ractical  sagacity.     ... 

"Every  statute  may  be  said  to  have  two  aspects:  if  it 
be  severe  in  regard  to  an  individual,  it  is  beneficial  to  the 
community;  if  it  punishes  crime,  it  also  prevents  fraud; 
if  it  infringes  on  some  venerable  rule  of  the  ancient  law, 
it  also  introduces  more  simple,  rapid  and  less  expensive 
modes  of  procedure ;  so  that  every  act  is  capable,  if  the 
doctrine  be  admitted,  of  being  construed  in  two  ways 
diametrically  opposed  to  each  other,  according  to  the  tem- 
jper  of  the  magistrate  to  lohom  the  task  is  confided. 

"The  inconsistencies  and  discrepancies,  as  they  now 
exist,  in  truth,  too  often  arise  from  a  desire,  often  an  un- 
conscious one,  to  substitute  the  judicial  for  the  legislative 
will,'  and  they  can  only  he  corrected  hy  adhering  to  the  car- 
dinal rule  that  the  judicial  functions  are  always  hest  dis- 
charged hy  an  honest  and  earnest  desire  to  ascertain  and 
effect  the  intention  of  the  law-making  hodyT  ^ 

§  50.  JLs  to  incidental  contractual  powers. — Every  cor- 
poration, unless  restrained  by  law,  has  the  incidental 
power  to  make  any  contract  which  may  be  necessary  to 

1  Sedgwick,  Stat.  &  Const.  Law  (3d  ed.),  335,  336,  337. 


§  51.]  COXTKACTS  OF  CORPOKATIONS.  75 

advance  the  objects  of  its  creation.^  In  deciding  whether 
a  corporation  can  make  a  particular  contract,  it  must  be 
considered  in  the  first  place  whether  its  charter,  or  some 
statute  binding  upon  it,  forbids  or  permits  it  to  make 
such  a  contract;  and  if  the  charter  and  valid  statutory- 
law  are  silent  upon  the  subject,  in  the  second  place, 
whether  the  power  to  make  such  a  contract  may  not  be 
implied  on  the  part  of  the  corporation  as  directly  or  inci- 
dentally necessary  to  enable  it  to  fulfill  the  purposes  of 
its  existence;  or  whether  the  contract  is  entirely  foreign, 
to  its  purpose.^  Whenever  a  corporation  makes  a  con- 
tract, it  is  the  contract  of  the  legal  entity  —  of  the  artificial 
being  created  by  the  charter  —  and  not  the  contract  of  the 
individual  members.^  If  the  foregoing  distinctions  be 
kept  in  mind,  much  doubt  and  needless  confusion  will  be 
avoided. 

§  51.  Irregularity  no  defense  to  liaMlity  on  corporate 
contract. —  A  corporation  is  estopped  to  deny  its  liability 
under  a  contract  on  the  ground  that  the  officers  were 
not  technically  authorized  to  make  it,  or  that  its  own  pro- 
ceedings in  the  premises  were  irregular,  when  the  con- 
tract Avas  in  the  scope  of  its  powers,  was  entered  into  bv 
proper  officers,  and  has  been  recognized  by  corporate  acts.* 

1  Galena  v.  Corwith,  48  111.  423;  Straus  v.  Eagle  Ins.  Co.,  5  Ohio 
St.  59;  Broughton  v.  Manchester  Water  Co.,  3  B.  &  A.  1;  Seibrecht 
V.  New  Orleans,  13  La.  Ann.  496;  Brooklyn  Gravel  Co.  v.  Slough ter, 
33  Ind.  185;  Weckler  v.  First  Nat.  Bank,  42  Md.  581;  Goodrich  v.  De- 
troit, 12  Mich.  279;  Bateman  v.  Ashton-under-Lynn,  3  H.  &  N.  323; 
Douglas  V.  Virginia  City,  5  Nev.  147. 

2  Weckler  v.  First  Nat.  Bank,  42  Md.  581. 

3  Head  v.  Prov.  Ins.  Co.,  2  Cranch  (U.  S.),  127;  Dartmouth  College 
V.  Woodward,  4  Wheat.  (U.  S.)  636:  Bank  of  U.  S.  v.  Dandridge,  12 
Wheat.  (U.  S.)  64;  Petersborough  R.  R.  Co.  v.  Nassau  Co.,  59  N.  H. 
385. 

*Bakersfield  Ass'n  v.  Chester,  55  Cal.  98;  Dooly  v.  Cheshire  Glass 


^^4:  CONTEAGTS  OF  COKPORATIONS.  [§  52. 

§  52.  But  ivlien  charter  prescribes  mode  of  contracting, 
it  must  he  strictly  2nirsued.— It  is  not  necessary  that  the 
charter  of  a  corporation  should  confer  the  power  of  con- 
tracting by  an  officer  or  agent  in  order  to  give  him  that 
right ;  but  when  the  charter  prescribes  any  mode  in  which 
the  officers  or  agents  of  a  corporation  must  act,  that  mode 
must  be  strictly  pursued  to  render  the  contract  obliga- 
tory upon  the  corporation.^  Officers  of  a  corporation  are 
special  and  not  general  agents;  consequently  they  have 
no  power  to  bind  the  corporation  by  contract  except 
within  the  limits  prescribed  by  the  charter  and  by-laws. 
Persons  dealing  with  sueh  officers  are  charged  w4th  notice 
of  the  authority  conferred  upon  them  and  of  the  limita- 
tions and  restrictions  upon  it  contained  in  the  charter.^ 
Accordingly,  an  insurance  company  was  held  not  liable 
on  a  contract,  and  was  not  estopped  from  setting  up  the 
defense  of  ultra  vires,  though  its  agent  had  led  the  other 
contracting  party  to  believe,  and  he  did  believe,  that  the 
company  had  power  to  make  it,  and  though  no  pretense 

Co.,  15  Gray  (Mass.),  494;  Merrick  v.  Eeynolds  Eng.  Co.,  101  Mass. 
381;  Salem  Nat.  Bank  v.  Almy,  117  Mass.  476;  Chamberlin  v.  Hugue- 
not Mfg.  Co.,  118  Mass.  532;  Ewing  v.  Robeson,  15  Ind.  26;  Hammond 
V.  Straus,  53  Md.  1;  Rush  v.  Steamboat  Co.,  84  N.  C.  70;  Whitney  v. 
Wyman.  101  U.  S.  392;  Upton  v.  Hansborough,  3  Biss.  (U.  S.)  417. 

iSt.  Andrew's  Bay  L.  Co.  v.  Mitchell,  4  Fla.  192;  Bank  of  Augusta 
V.  Earle.  13  Pet.  (U.  S.)  588;  Talmage  v.  Coal  Co.,  3  Head  (Tenn.), 
377;  Norwich  v.  Norfolk  R  Co.,  4  El.  &  Bl.  397;  S.  C,  82  E.  C.  L.  396; 
Eastern  Counties  R.  Co.  v.  Hawkes,  5  H.  L.  331;  Taylor  v.  Chichester, 
etc.  R.  Co.,  L.  R.  2  Ex.  356;  Canal,  etc.  R.  Co.  v.  St.  Charles  R.  Co., 
44  La.  Ann.  1069;  Boyce  v.  Montauk  Gas  Co.,  37  W.  Va.  73;  Ashbury 
Ry.  Co.  V.  Riche,  7  H.  L.  653;  Hazlehurst  v.  Savannah  R.  Co.,  43  Ga.  13; 
Cozart  V.  Georgia  R.  Co.,  54  Ga.  379;  Lucas  v.  White  Line  Trans.  Co., 
70  Iowa,  550. 

2  Adriance  v.  Roome,  52  Barb.  (N.  Y.)  399;  Pittsburg  R.  Co.  v.  Keo- 
kuk Bridge  Co.,  131  U.  S.  371;  Pearce  v.  Madison  R.  Co.,  21  How. 
(U.  S.)  441;  Thomas  v.  Railroad  Co.,  101  U.  S.  71;  Central  Co.  v.  PuU- 
man  Co.,  139  U.  S.  24. 


§  53.]  CONTKACTS  OF  CORPORATIONS.  75 

was  set  up  by  the  company,  or  its  agent,  that  the  con- 
tract was  ultra  vires,  until  a  loss  thereunder  was  known 
by  all  parties  to  have  occurred.^ 

§  53.  All  persons  'bound  to  take  notice  of  limits  ofcor- 
2)orate  powers. —  Every  person  who  enters  into  a  contract 
with  a  corporation  is  bound  at  his  peril  to  take  notice  of 
the  legal  limits  of  its  capacity.^  A  corporation  is  not  held 
out  by  the  government  nor  by  the  stockholders  as  author- 
ized to  make  contracts  which  are  beyond  the  purposes  and 
scope  of  its  charter;  and  if  it  exceeds  its  chartered  pow- 

1  Webster  v.  Buffalo  Ins.  Co.,  7  Fed.  Rep.  399. 

2  Davis  V.  Old  Colony  Ry.  Co.,  131  Mass.  258;  Whittenton  Mills  v. 
Upton,  10  Gray  (Mass.),  582;  Richardson  v.  Sibley.  11  Allen  (Mass.), 
■65:  Pearce  v.  Madison  R.  Co..  21  How.  (U.  S.)  441:  East  Anglian  Ry. 
V.  Eastern  Counties  Ry.,  11  C.  B.  775;  Ashbury  Co.  v.  Riche,  7  H.  L. 
853;  Central  Trans.  Co.  v.  Pullman  P.  Car  Co.,  139  U.  S.  24;  Thomas 
V.  Railroad  Co.,  101  U.  S.  71;  Mallory  v.  Hanauer  Oil  Works,  86  Tenn. 
598;  Zabriskie  v.  Cleveland,  etc.  R.  Co.,  23  How.  (U.  S.)  381;  Pacific 
Postal  Tel.  Co.  v.  Western  Union  Tel.  Co.,  50  Fed.  Rep.  493;  Branch 
V.  Jessup,  106  U.  S.  468;  Pennsylvania  R.  Co.  v.  St.  Louis  R.  Co.,  118 
U.  S.  290;  Salt  Lake  City  v.  Hollister,  118  U.  S.  256;  Willamette 
Mfg.  Co.  V.  Bank,  119  U.  S.  191:  Green  Bay  R.  Co.  v.  Steamboat  Co., 
107  U.  S.  98;  Pittsburg,  etc.  R.  Co.  v.  Keokuk  Bridge  Co.,  131  U.  S. 
1?71;  Oregon  R.  Co.  v.  Oregonian  R.  Co.,  130  U.  S.  1;  Sutliff  v.  Lake 
County,  147  U.  S.  230;  Marcy  v.  Oswego,  92  U.  S.  637;  Humboldt  v. 
Long,  92  U.  S.  642;  Dixon  County  v.  Field,  111  U.  S.  83;  Lake  County 
v.  Graham,  130  U.  S.  674;  Chaffee  County  v.  Potter,  142  U.  S.  355; 
St.  Louis  Ry.  Co.  v.  Terre  Haute,  etc.  Co.,  145  U.  S.  893;  Bailey  v. 
M.  E.  Church,  71  Me.  472;  Franklin  County  v.  Lewiston,  etc.  Inst,  68 
Me.  43:  Hood  v.  N.  Y.  etc.  R.  Co.,  22  Conn.  17;  s.  C,  23  Conn.  622; 
Naugatuck  R.  Co.  v.  Waterbury  Button  Co.,  24  Conn.  482;  Converse 
V.  Norwich  Trans.  Co.,  33  Conn.  179;  In  re  Cork,  etc.  R.  Co.,  L.  R.  4 
Ch.  748;  Greeley  v.  Nashua  Sav.  Bank,  63  N.  H.  145;  Hall  v.  Paris, 
59  N.  H.  74;  Simmons  v.  Troy  Iron  Works,  92  Ala.  427;  Sherwood  v. 
Alvis,  83  Ala.  115;  Smith  v.  Alabama,  etc.  Co.,  4  Ala.  558;  Mont- 
gomery V.  Montgomery,  etc.  Co.,  31  Ala.  76;  Waddill  v.  Alabama  R. 
Co.,  35  Ala.  323;  Chambers  v.  Falkner,  65  Ala.  448;  Wilkes  v.  Georgia, 
etc.  R.  Co.,  79  Ala.  180;  N.  W.  Packet  Co.  v.  Shaw,  37  Wis.  655;  Luthe 
V.  Farmers'  Ins.  Co.,  55  Wis.  543. 


TG  CONTKACTS  OF  CORPORATIONS.  [§  54. 

ers,  not  only  may  the  government  take  away  its  charter/ 
but  those  who  have  subscribed  to  its  stock  may  avoid  any 
contract  made  by  the  corporation  in  clear  excess  of  its 
poAvers,  and  a  court  of  chancery,  on  the  application  of  a 
stockholder,  will  restrain  the  corporation  from  carrjing 
out  the  contract.^ 

§  54.  Why  corimrations  not  liable  on  ultra  vires  con- 
tracts.— The  reasons  why  a  corporation  is  not  liable  on  a 
contract  ultra  vires  are,  first,  the  interest  of  the  public 
that  the  corporation  shall  not  transcend  the  limits  of  the 

1  Merchants' Nat.  Bank  v.  Hanson,  33  Minn.  40;  Hennesy  v,  St. 
Paul,  54  Minn.  219;  National  Bank  v.  Mathews,  98  U.  S.  621;  Na- 
tional Bank  v.  Whitney,  103  U.  S.  99;  Fortier  v.  N,  O.  Bank,  113  U.  S» 
439. 

-Davis  V.  Old  Colony  R.  Co.,  131  Mass.  258;  Pratt  v.  Pratt,  33  Conn. 
446;  Belmont  v.  Erie  R.  Co.,  52  Barb.  (N.  Y.)  637;  Black  v.  Delaware, 
etc.  Canal  Co.,  22  N.  J.  Eq.  130;  Tippecanoe  Co.  v.  Lafayette  R.  Co.,  50' 
Ind.  85;  Teachout  v.  Des  Moines,  etc.  R.  Co.,  75  Iowa,  722;  Chicago 
V.  Cameron,  120  111.  447;  Bliss  v.  Anderson,  31  Ala.  612;  Bergman  v. 
St.  Paul,  etc.  Ass'n,  29  Minn.  275;  Cass  v.  Manchester,  etc.  Co.,  9  Fed. 
Rep.  640;  Zabriskie  v.  Hackensack,  etc.  Co.,  18  N.  J.  Eq.  178;  Zabris- 
kie  V.  Cleveland,  etc.  R.  Co.,  23  How.  (TJ.  S.)  381;  Memphis  v.  Dean,  8 
Wall.  (U.  S.)  64;  Bronson  v.  La  Crosse  R.  Co.,  2  Wall.  (U.  S.)  283; 
Dodge  V.  Woolsey,  18  How.  (U.  S.)  331;  Heath  v.  Erie  R.  Co.,  8 
Blatch.  (U.  S.)  347;  Rogers  v.  Oxford,  etc.  R.  Co.,  2  De  G.  &  J.  662; 
Kernaghan  v.  Williams,  L.  R.  6  Eq.  228;  Hodgson  v.  Powis,  1  De  G., 
M.  &  G,  6;  Cohen  v,  Wilkinson,  1  Macn.  &  G.  481;  Ware  v.  Regents 
Canal  Co.,  3  De  G.  &  J.  212;  Pickering  v.  Stevenson,  L.  R.  14  Eq.  322; 
Mills  V.  Northern  R.  Co.,  L.  R.  5  Ch.  Div.  621 ;  Aukland  v.  West- 
minster Board,  L.  R.  7  Ch.  Div.  597;  Bagshaw  v.  Eastern  Counties 
Ry.  Co.,  7  Hare,  114;  Ware  v.  Grand  Junction  Water-works  Co.,  2 
Russ.  &  Mylne,  470;  Cunliffe  v.  Manchester,  etc.  Canal  Co.,  2  id.  480,  n.; 
Great  Western  R.  Co.  v.  Rushout,  5  De  G.  &  S.  290;  Bird  v.  Bird's 
Pat.  Co.,  L.  R.  9  Ch.  Div.  358;  Solomons  v.  Lang,  12  Beav.  339;  Lyde 
V.  Eastern  Bengal  R.  Co.,  36  Beav.  13;  Snell  v.  Minneapolis,  etc.  R. 
Co.,  45  Minn.  264;  Young  v.  Gaslight  Co.,  15  N.  Y.  Sup.  443;  McCray 
V.  Junction  R.  Co.,  9  Ind.  358;  Stewart  v.  Erie,  etc.  Trans.  Co.,  1* 
Minn.  348. 


f  55.]  CONTKACTS  OF  CORPORATIONS.  77 

powers  granted;  second,  the  interest  of  the  stockholders 
that  the  capital  stock  shall  not  be  subjected  to  the  risk 
of  enterprises  not  contemplated  by  the  charter,  and  there- 
fore not  authorized  by  the  stockholders  in  subscribing  for 
the  stock;  and  third,  the  obligation  of  every  one  entering 
into  a  contract  with  a  corporation  to  take  notice  of  the 
legal  limits  of  its  powers.^ 

§  55.  As  to  distinction  'between  ultra  vires  and  illegal 
oontracfs. —  It  has  been  confidently  asserted  in  a  certain 
class  of  cases,  and  the  position  is  restated  and  adopted  by 
a  very  able  author,-  that  when  acts  of  corporations  are 
spoken  of  as  tdtra  vires  it  is  not  intended  that  they  are 
unlawful,  or  even  such  as  the  corporation  cannot  per- 
form, but  merely  those  that  are  not  within  the  powers 
conferred  upon  the  corporation  by  the  act  of  its  creation, 
and  are  in  violation  of  the  trust  reposed  in  the  managing 
board  by  the  shareholders  that  the  affairs  shall  be  man- 
aged, and  the  funds  applied  solely,  for  carrying  out  the 
objects  for  which  the  corporation  was  created;  and  that 
whether  a  contract  as  orifjinally  made  was  ultra  vires  is 
not  a  very  important  inquiry.*  The  learned  judges  and 
law  writers  who  have  adopted  the  views  promulgated  by 
Chief  Justice  Comstock  in  the  Bissell  Case,  and  to  the 
same  effect  in  the  Whitney  Arms  Cuinjyany  Case,  seem  to 
have  taken  the  position  and  involved  the  subject  in  more 
or  less  confusion  by  assuming  that  no  act  or  contract  can 
be  unlawful  or  illegal  unless  it  be  infected  with  the  taint 
of  moral  turpitude,  or  fruitful  of  fraud  and  felony.  This 
is  certainly  an  exaggerated  idea  of  an  illegal  transaction 

1  Railway  Co.  v.  Keokuk  Bridge  Co.,  131  U.  S.  384;  Pearce  v.  Madi- 
son, etc.  Ry.  Co.,  21  How.  (U.  S.)  441 ;  Central  Trans.  Co.  v.  Pullman 
Co.,  139  U.  S.  24,  and  cases  cited  in  preceding  note. 

2  Beach  on  Priv.  Corp.,  §  422. 

3  Whitney  Arms  Co.  v.  Barlow,  63  N.  Y.  62. 


78  CONTKACTS  OF  COKPORATIONS.  [§  55. 

when  considered  in  connection  with  corporate  undertak- 
ings. An  act  or  contract  may  be  illegal  or  unlawful  be- 
cause expressly  or  impliedl}'-  prohibited  by  law,  and  yet  be 
for  some  benevolent  and  worthy  purpose.  Such  transac- 
tions are  made  unlawful  or  illegal  because  prohibited  by 
and  contrary  to  la^v.  The  proposition  that  when  acts  of 
corporations  are  spoken  of  as  ultra  vires  it  is  not  intended 
that  they  are  such  as  the  corporation  cannot  perform  is 
directly  refuted  by  a  long  line  of  cases  in  the  United 
States  supreme  court,  and  notably  in  the  case  of  Central 
Transportation  Co.  v.  Pullman  Car  Co.,  139  TJ.  S.  24, 
where  Mr.  Justice  Gray,  delivering  the  opinion  of  the 
court,  says:  "A  contract  of  a  corporation  which  is  ultra 
vires  in  the  proper  sense,  that  is  to  say,  outside  the  ob- 
jects of  creation  as  defined  in  the  law  of  its  organization, 
and  therefore  beyond  the  powers  conferred  upon  it  by 
the  legislature,  is  not  voidable  only,  but  wholly  void  and 
of  no  legal  effect.  The  objection  to  the  contract  is,  not 
merely  that  the  corporation  ought  not  to  have  made  it,  hut 
that  it  could  not  onaJce  it.  .  .  .  JV^o  performance  on 
either  side  can  give  the  unlawful  contract  any  validity  or 
be  the  foundation  of  any  right  of  action  upon  it." 

So  in  People  v.  Chicago  Gas  Trust  Co.,  130  111.  286, 
the  court,  in  discussing  this  phase  of  the  subject,  say : 
"  The  word  '  unlawful '  as  applied  to  corporations  is  not 
used  exclusively  in  the  sense  of  maluin  in  se  or  malum 
prohibitum.  It  is  also  used  to  designate  powers  which 
they  are  not  authorized  to  make,  or  acts  which  they  are 
not  authorized  to  do;  or,  in  other  words,  such  acts, pow- 
ers o/nd  contracts  as  are  ultra  vires.^^  ^ 

1  And  to  the  same  effect  are  Pittsburg,  etc.  Ry.  Co.  v.  Keokuk 
Bridge  Co.,  131  U.  S.  371,  389;  Mayor  of  Norwich  v.  Norfolk  Ry.,  4 
El.  &  Bl.  (Q.  B.)  397;  McGregor  v.  Railway  Co.,  18  Q.  B.  457;  Gunness 
V.  Land  Corp,  of  Ireland,  23  Ch.  Div.  341 ;  Taylor  v.  Chichester,  etc. 


§  50.]  OONTEAOTS  OF  CORPOKATIONS.  19 

§  56.  Proliibited  contracts  regarded  as  illegal  android. 
It  is  the  accepted  doctriae  of  the  courts  of  this  country 
and  England  that  a  contract  of  a  corporation  which  is 
prohibited  by  its  charter  or  laws  under  which  it  is  cre- 
ated, either  expressly  or  by  necessary  implication,  is  con- 
sidered as  illegal  and  void,  and  that  in  passing  upon  such 

Ry.  Co.,  L.  R.  2  Ex.  356;  Wetherell  v.  Jones,  3  B.  &  A.  231;  Bartlett 
V.  Viner,  Carth.  252;  Smith  v.  Mawhood,  14  M.  &  W.  453;  South  Ry. 
etc.  Co.  V.  Great  Northern  Ry.,  9  Exch.  75.  84;  Shrewsbury,  etc.  Ry. 
Co.  V.  Northwestern  Ry.  Co.,  6  H.  L.  113;  Thomas  v.  Railroad  Co.,  101 
U.  S.  82;  State  v.  Nebraska  Distilling  Co.,  29  Neb.  700;  Franklin  Co. 
V.  Lewiston  Inst,  etc.,  68  Me.  43. 

In  State  v.  Nebraska  Distilling  Co.,  supra,  the  court  say:  "A  cor- 
poration, therefore,  can  only  be  organized  under  our  laws  for  a 
lawful  purpose,  and  any  acts  done  by  such  a  corporation  for  the  ac- 
complishment of  a  purpose  not  lawful  is  unauthorized,  in  excess  of 
its  powers,  and  therefore  illegal  and  void.  Tlie  acts  of  a  corporation 
to  be  unlawful  need  not  necessarily  be  7nala  prohibita  or  malum 
in  se,  although  such  acts  are  illegal  in  all  cases;  but  every  act  of  a 
corporation  which,  by  the  terms  of  its  charter,  it  is  not  authorized  to 
do,  is  in  excess  of  its  charter,  and  therefore  unlawful." 

So  in  Franklin  Co.  v.  Lewiston  Inst.,  supra,  the  court  say:  "The 
agreement  was  that  the  Franklin  Company  should  pay  for  the  stock 
for  which  the  trustee  of  the  bank  had  subscribed,  and  take  the  stock 
and  hold  it  as  security.  We  thus  see  that  by  the  very  terms  of  the 
agreement  the  money  was  to  be  applied  to  a  specific  purpose,  and 
that  purpose  an  illegal  one.  We  use  the  word  'illegal,'  not  in  the 
sense  of  malum  in  se  nor  malum  prohibitum,  but  in  the  sense  in 
which  it  is  used  to  describe  the  unauthorized  acts  of  corporations  — 
acts  and  ccnitracts  tiltra  vires." 

And  Selden,  J.,  in  Bissell  v.  Michigan,  etc.  Co.,  23  N.  Y.  258,  says: 
"  The  contracts  of  corporations  which  are  not  authorized  by  their 
charters  are  illegal  because  they  are  made  in  contravention  of  pub- 
lic policy.  .  .  .  Although  the  unauthorized  contract  maybe  neither 
malum  in  se  nor  malum  2orohibitum,  but,  on  the  contrary,  may  be  for 
some  benevolent  or  worthy  object  —  as  to  build  an  almshouse  or 
a  college,  or  to  purchase  and  distribute  tracts  or  books  of  instruc- 
tion,—  yet,  if  it  is  a  violation  of  public  policy  for  corporations  to  exer- 
cise powers  which  have  never  been  granted  to  them,  such  contracts, 
notwithstanding  their  praiseworthy  nature,  are  illegal  and  void." 


80  COXTRACTS  OF  CORPORATIONS.  [§  57. 

contracts  the  courts  have  construed  the  meanins:  of  the 
words  "illeo:al"  and  '■'■  ultra  vires''^  as  identical.^  In 
Taylor  v.  Chichester  &  Midhurst  By.  Co.^  supra,  Mellor,  J., 
said:  "I  think  that  the  statutes  by  which  the  defend- 
ants were  incorporated  did  constitute  them  a  company 
created  for  particular  purposes,  with  special  powers,  and 
that  the  application  of  the  funds  to  be  raised  under 
them  is  limited  to  prescribed  and  definite  objects;  and 
that  by  reasonable  inference  from  the  provisions  of  the 
statute,  the  bargain  now  under  consideration  is  prohib- 
ited, and  that  its  performance  by  the  defendants  would 
amount,  not  merely  to  a  breach  of  trust,  the  remedy  for 
which  would  be  in  equity,  hut  that  the  contract  itself,  heing 
ultra  vires  and  illegal  because  prohibited,  the  defense  is 
properly  raised  in  a  court  of  law."  So,  in  Mayor  of  Nor- 
wich V.  Norfolk  Ry.,  above  cited,  the  court  say :  "  It  re- 
mains to  be  considered  whether  this  contract  was  illegal, 
as  not  authorized  by  the  act  incorporating  the  defendant 
company,  and  therefore  prohibitedby  that  act.  ...  So 
a  contract  for  a  purpose  unconnected  with  the  purpose  of 
incorporation  is,  or  may  result  in,  an  application  of  the 
funds  to  a  purpose  unconnected  with  the  purpose  of  in- 
corporation, and  is  therefore  held  to  be  prohibited  and 
void.''^ 

§  57.  Unauthorized  contracts  none  tJie  Jess  illegal  de- 
cause  statutes  iynored  by  courts. —  It  has  been  contended 
by  a  very  learned  author  that  a  contract  is  not  necessarily 
void  and  not  to  be  enforced  because  it  is  prohibited  by 
statute,  by  showing  that  courts  have  ignored  such  pro- 
visions in  the  statute  as  though  they  were  not  in  exist- 

1  Taylor  v.  Chichester,  etc.  Ey.  Co.,  L.  R  3  Ex.  356;  Gunness  v. 
Land  Corp.  of  Ireland,  22  Ch,  Div.  349;  McGregor  v.  Railway  Co.,  18 
Ad.  &  El.  (Q.  B.)  457;  Mayor  of  Norwich  v.  Norfolk  Ry.,  4  El.  &  Bl. 
(Q.  B.)  397;  and  see  cases  cited  in  preceding  section. 


§  57.]  CONTRACTS  OF  COEPOEATIOXS,  81 

ence.^  This  astonishing  deduction  is  stated  in  the  fol- 
lowing language:  "Statutes  have  frequently  been  passed 
expressly  prohibiting  corporations  from  exercising  any 
powers  except  those  conferred  by  their  charters.  Some- 
times the  prohibitions  are  enacted  in  the  form  of  general 
laws  applicable  to  all  corporations,  and  sometimes  they 
are  incorporated  in  special  charters  applicable  to  partic- 
ular corporations  only. 

"Prohibitions  of  this  description  are  merely  declaratory 
of  the  general  comrnon-law  prohibition  against  any  exer- 
cise of  corporate  poioers  which  leave  not  heen  authorized  hy 
the  legislature  J  and  there  is  no  reason  for  supposing  that  the 
legislature,  in  enacting  such  a  prohibition,  intends  to  give 
it  any  greater  force  or  effect  than  the  common-law  rule. 

"  There  is  probably  no  state  or  country  in  which  a  rule 
contrary  to  the  views  above  expressed  has  been  system- 
atically enforced.  In  many  instances  these  legislative 
prohibitions  declaratory  of  the  common  law  have  been 
tacitly  ignored  by  the  courts.  Thus,  the  Ee vised  Statutes 
of  New  York  declare  that:  'In  addition  to  the  powers 
enumerated  .  .  .  and  those  expressly  given  in  its 
charter,  or  in  the  act  under  which  it  shall  be  incorpo- 
rated, no  corporation  shall  possess  or  exercise  any  corpo- 
rate powers  except  such  as  shall  be  necessary  to  the 
exercise  of  the  powers  so  enumerated  and  given ; '  but  it 
has  never  been  held  that  corporate  acts  and  contracts  in  vio- 
lation of  this  prohibition  are  necessarily  null  and  unen- 
forceahle  at  law.  There  are  numerous  cases  in  which 
prohibited  acts  and  contracts  falling  within  the  prohibi- 
tion have  been  recognized  and  given  effect."^     This  is 

1  Morawetz  on  Corp.,  §  658. 

-  Mor.  Priv.  Corp.,  §§  658,  659,  the  numerous  cases  resolving  them- 
selves into  f /tree  — Moss  v.  Averhill,  10  N.  Y.  460;  Whitney  Arms  Co. 
V.  Barlow,  63  id.  62;  and  Whitney  v.  Wyman,  101  U.  S.  392,— the  lat- 
ter of  which  does  not  sustain  any  such  propositions. 
6 


82  CONTEACTS   OF   OORPOKATIOlSrS.  [§  57. 

indeed  a  sad  commentary  on  the  courts  of  'New  York,  and 
from  some  decisions  which  have  been  rendered  by  courts 
in  that  state  the  inference  might  be  readily  drawn  that 
the  learned  author  is  speaking  with  some  truth.  "While 
it  is  a  matter  of  common  knowledge  in  the  profession 
that  courts  have  frequently  ignored  certain  statutes,  judg- 
ing from  their  decisions,  yet  it  would  seem  to  require  a 
vast  deal  of  hardihood  to  claim  this  as  authority  for  a 
violation  of  the  law.  It  is  certainly  one  of  the  weakest 
arguments  that  could  be  adduced,  and  possesses  not  the- 
sliirhtest  merit. 


CHAPTER  IV. 
THE  DOCTRINE  APPLIED  TO  EXECUTED  CONTRACTS. 

§  58.  Estopjiol  —  Defense  of  ultra  vires  to  executed  contracts. 

59.  Same  subject. 

GO.  Same  subject  —  Corporation  similar  to  one  under  legal  disabil- 
ity. 

CI.  Performance  by  innocent  party  to  contract  ultra  vires  a  cor- 
poration. 

C>2.  Position  of  United  States  supremo  court  on  alleged  rule. 

0;5.  San  Antonio  v.  McIianPy. 

64.  Railway  Co.  v.  M(;Carthoy. 

05.  Ilitclicock  V.  (lalvL'ston. 

(iO.  Jones  V.  (Juaranty  Co. 

07.  National  Bank  v.  Matbews. 

68.  Central  Transportation  Co.  v.  Pullman  Car  Co. 

§58.  JiJHtoppd  —  Dcfcusc  of  ultra  rins  as  to  f.r  ecu  ted 
contracts. —  Wliilo  a  grout  iiKijority  of  tho  coiii'ts  ol"  this 
country,  both  federal  and  state,  agree,  in  the  main,  thjit 
a  contract  idlra  vires  a  cori)oration  must  be  (huMiicd  as 
illegal  and  void,  and  no  suit  can  be  maintained  uj)on  it,' 
yet  if  such  a  contract,  though  in  contravention  of  law  as 
originally  nuide,  be  executed  or  partly  performed  by  ouc> 
or  the  other  of  the  parties  to  it,  in  that  case  it  has  been 
held  by  some  state  courts  that  the  defense  of  tt/f,fa  vires 
should  not  be  allowed.^  The  grounds  upon  which  this 
denial  is  predicated  arc  that  tho  company  is(!st()p|to(l  fi-om 
sotting  up  its  own  unauthorized  act  and  its  own  iiicMpac- 
ity  to  evade  performance  on  its  part,  after  receiving  tlio 

•  See  i:;^  9,  53,  54,  and  cases  there  cited. 

■i  Whitney  Arms  Co.  v.  Barlow,  0:j  N.  Y.  03;  Bradley  v.  Ballard,  55 
III.  413;  Darst  v.  Gale,  83  III.  130;  Beach  on  Priv.  Corp.,  §  422. 


84:  EXECUTED   CONTRACTS.  [§  59. 

fruits  of  the  bargain ;  that  the  court  refuses  to  entertain 
the  defense  which  common  honesty  forbids  the  company 
to  make;  that  a  man  may  become  bound  by  the  act  of  an. 
unauthorized  agent  and  be  held  liable  on  the  contract 
made  for  him,  not  on  the  ground  that  the  agent  in  fact 
had  any  authority,  but  for  some  conduct  on  the  part  of 
the  alleged  principal  which  precludes  him  from  raising 
the  question  of  authority.^ 

§  59.  Same  subject — Let  us  see  if  the  propositions  con- 
tained in  the  next  preceding  section  are  not  both  falla- 
cious and  untenable.  First,  it  is  contended  in  the  cases 
heretofore  cited  that  the  company  is  estopped  from  set- 
ting up  its  own  unauthorized  act  and  incapacity  to  evade 
performance  on  its  part.  It  is  asserted  with  much  con- 
lideuce,  and  it  is  submitted  that  the  great  weight  of  au- 
thority bears  out  the  assertion,  that  the  act  set  up  as 
unauthorized  is  not,  and  by  any  possibility  could  not, 
under  the  charter  of  the  corporation,  have  been  its  own^ 
but  is  the  unauthorized  act  of  its  officer  or  agent.  It  could 
not  have  been  the  corporate  act,  for  in  its  creation  the 
element  of  power  for  performing  the  particular  act  was 
left  out  of  its  organization  —  the  power  is  wanting.  As  to 
the  corporation,  the  legal  entity,  such  act  is  null  —  as 
though  it  had  never  been  performed.  It  is  a  creature 
resting  under  a  legal  disability.  The  law  has  said  it  may 
not  and  cannot  perform  such  an  act.  It  is  created  with 
specified  powers  only,  and  for  those  purposes  enumerated 
in  the  act  of  its  creation.  It  is  not  on  the  same  footing 
as  a  person  who  may  be  bound  by  the  act  of  an  unauthor- 
ized agent  by  conduct  of  acquiescence  or  ratification,  be- 
cause it  cannot  ratify  an  act  which  it  has  no  power  in 
itself  to  perform.'^ 

1  See  cases  cited  in  preceding  note. 

2  See  §  78  post,  and  cases  cited. 


§  60.]  EXECUTED   CONTKACTS.  85 

§60.  Same  subject — Corporation  similar  to  person 
under  legal  disaMlitij. —  Ultra  vires  acts  of  corporations 
bear  a  striking  similarity  to  those  of  persons  resting  under 
a  legal  disability,  such  as  infants  and  married  women;  in 
fact  a  corporation  and  a  married  woman  have  many  points 
in  common.  Neither  has  any  existence  until  created  Ijy 
law.  Individuals,  by  conforming  to  specified  require- 
ments of  the  law,  acquire,  in  a  corporate  capacity,  certain 
rights  and  powers,  and  are  subject  to  certain  liabilities, 
when  acting  in  such  legal  capacity.  Their  individual 
identity  is  sunk  and  merged  in  the  corporate  entity,  and 
in  such  capacity  only  are  they  recognized  by  the  law 
when  the  acts  of  the  corporation  are  involved.  So,  like- 
wise, it  may  be  said  of  a  married  woman.  She  becomes 
such  only  through  methods  prescribed  by  the  law,  and  as 
such  —  the  care  and  solicitude  of  the  law  —  she  is  a  crea- 
ture of  but  slight  volition.  She  rests  under  a  legal  disa- 
bility which,  when  removed  by  the  laAv,  enables  her  to 
act  and  contract  as  2k  feme  sole,  free  from  legal  restrictions. 
While  such  legal  disability  remains,  a  married  woman  is 
incapable  of  entering  into  any  binding  contract,  and  her 
agreements  are  not  merely  voidable,  but  absolutely  void. 
She  cannot  ratify  them  during  coverture  so  as  to  furnish 
a  good  consideration  for  a  subsequent  agreement  made 
after  she  shall  have  become  discovert.  She  cannot  be  es- 
topped by  anything  in  the  nature  of  a  contract.  By  the 
policy  of  the  law  she  is  prohibited  from  such  acts  and 
contracts,  and  "common  honesty"  has  no  place  in  the 
consideration  of  the  question.  The  same  is  true  of  a  corpo- 
ration. The  legislature  may  remove  the  legal  disability 
by  conferring  upon  it  power  to  perform  a  given  act  or  any 
act  that  an  individual  may  do.  Until  such  is  done  it 
cannot  be  held  responsible  for  acts  which  the  law  says  it 
may  not  and  cannot  do,  though  such  acts  be  accomplished 


86  EXECUTED    CONTRACTS.  [§  61. 

by  its  oflRcers  or  agents.  For  absurd  and  contradictory 
would  it  be  to  hold  that  such  a  creature  is  absolutely  dis- 
abled by  legal  incapacity  from  making  certain  contracts, 
and  at  the  same  time  hold  that  an  attempted  contract, 
though  void  as  a  contract,  still  remains  good  by  way  of 
estoppel.  If  a  corporation  may  give  vitality  to  a  contract 
expressly  or  impliedly  prohibited,  by  mere  representation 
of  its  power  to  enter  into  it,  the  statutory  prohibition  could 
be  entirely  evaded  and  abrogated.  As  was  said  by  the 
court  in  Keen  v.  Coleman,  39  Pa.  St.  299 :  "  We  do  not 
see  how  there  can  be  an  estoppel  involved  in  the  very  act 
to  which  the  incapacity  relates,  that  can  take  away  that 
incapacity.  If  a  legal  incapacity  can  be  removed  by  a 
fraudulent  representation  of  capacity,  then  the  legal  in- 
capacity would  have  only  a  moral  bond  or  force,  which 
is  absurd."  If  estoppel  arises  against  a  corporation  to 
plead  ultra  vires  to  an  act  beyond  its  powers  to  perform 
by  the  mere  performance  or  part  performance  by  the  other 
party,  who  knows  of  the  corporation's  incapacity  to  enter 
into  such  a  transaction,  then  there  is  no  virtue  in  legisla- 
tive enactments,  and  every  person  may  safely  become  his 
own  law-maker.  This  stand  has  been  taken  by  some 
courts,  but  it  is  not  the  law. 

§  61.  Performance  1)ij  innocent  imrtij  of  contract  ultra 
vires  a  corporation. —  Great  stress  and  no  little  polemical 
vaporing  has  been  given  to  the  argument  respecting  the 
faithful  ])erforinance  of  a  given  ultra  vires  contract  by 
an  innocent  jparty.  This  sort  of  sophistry  has  a  pleasing 
sound  to  the  ear  of  equity,  but  is  delusive  and  without 
merit  when  urged  in  support  of  the  enforcement  of  ultra 
vires  contracts  of  corporations.  In  all  transactions  with 
corporations  as  now  created,  innocence  may  be  said  to 
be  analogous  to  negligence,  and  no  one  can  be  allowed  to 


§  Gl.]  EXECUTED   CONTKACTS.  87 

plead  his  own  laches  as  a  defense.  All  persons  who  deal 
with  a  corporation  are  deemed  by  the  law  to  know  its 
powers  and  the  limits  imposed  upon  its  acts  and  under- 
takings. The  act  by  which  a  corporation  obtains  its 
powers  is  a  public  act  open  to  all  the  world,  and  misrep- 
resentations by  officers  or  agents  of  a  corporation  regard- 
ing its  powers  or  capacities  can  have  no  proper  bearing 
in  arriving  at  its  liability.  The  charter  is  of  record  and 
open  to  inspection.  There  is  no  reason  why  a  person 
should  place  greater  trust  and  confidence  in  corporations 
than  in  individuals;  and  if  he  chooses  to  enter  into  agree- 
ments or  business  transactions  with  corporations  without 
investigating  as  to  its  powers  or  liability,  and  involves 
himself  in  loss  and  hardship,  he  has  no  reasonable  cause 
for  complaint,  because  he  is  not  deceived  —  it  is  his  own 
fault.  He  in  fact  stands  in  the  situation  of  a  wrong-doer.^ 
Even  positive  acts  of  encouragement  that  sometimes  op- 
erate to  estop  one  sui  juris  will  not  affect  one  under  a 
legal  disability.^  ISTo  person  who  is  considered  as  having 
any  reasonable  amount  of  business  sagacity  will  blindly 
enter  into  an  undertaking  with  another,  and  expend 
money  and  labor  on  such  undertaking,  without  first  in- 
vestigating as  to  the  responsibility  of  the  person  with 
whom  such  business  venture  is  contemplated.  Why,  then, 
should  he  relax  his  vigilance,  fling  reason  to  the  winds 
and  tax  his  credulity  when  coming  in  contact  with  a  legal 
creature  which  requires  the  combined  watchfulness  of  the 
courts,  the  public  and  its  creator  to  keep  it  within  the 
legitimate  confines  of  its  prescribed  powers  and  privi- 
leges? The  charter  or  act  of  incorporation  is  supposed 
to  be  in  his  mind  when  he  enters  into  the  unauthorized 
agreement.     He  elects  to  go  on  and  accept  the  conse- 

1  Carr  v.  Rogers,  7  Watts  (Pa.),  394. 

2  Glidden  v.  Striplen,  53  Pa.  St.  400. 


88  EXECUTED    CONTRACTS.  [§  61, 

quences  and  run  the  risk  of  being  confronted  with  the 
defense  of  want  of  power  in  the  corporation.  "When  so 
confronted,  and  he  brings  suit  for  specific  performance, 
can  it  be  said  that  he  comes  into  court  ^vith  clean  hands  ? 
Is  it  not  more  to  the  purpose  and  in  the  cause  of  truth  to 
say :  "  You  have  gone  on  and  performed  this  act  in  the 
light  of  a  public  statute.  You  knew  the  risks  you  were 
running  and  the  probable  consequences  of  your  act.  The 
court  cannot  help  you  in  enforcing  this  contract.  Your 
act  was,  in  fact,  a  fraud  upon  the  stockholders  in  attempt- 
ing to  subject  the  funds  of  the  corporation,  in  which  they 
all  have  an  interest,  to  a  purpose  beyond  the  scope  of  the 
corporate  business  and  to  entail  on  them  risks  they  never 
assumed  or  agreed  to."  Is  there  any  room  for  a  plea  of 
"  good  faith  "  on  the  part  of  one  who  has  performed  his 
side  of  a  contract  which  he  knew  the  corporation,  for 
want  of  power,  was  unable  to  carry  out?  Is  there  any 
room  for  a  plea  of  fraud  or  deceit  when,  at  the  time  the 
officer  or  agent  of  the  corporation  may  have  been  misrep- 
resenting the  corporate  powers,  he  knew  or  was  bound  to 
know  that  such  representation  was  in  fact  false  ?  Laws 
are  not  enacted  for  one  person  to  obey  and  another  to 
violate.  Honesty  of  purpose  is  no  excuse  for  one  who 
contravenes  the  law.  In  plain  "  English,"  ignorance,  os- 
tensible or  honajide,  cuts  no  figure  when  the  provisions 
of  a  statute  have  been  violated.  He  is  presumed  to  know 
them ;  and  if  he  do  not,  if  allowed  to  suffer  the  conse- 
quences of  disregarding  them,  it  may  so  develop  his  dis- 
cretion that  future  violation  of  such  enactments  will  bo 
avoided.  It  is  indeed  an  anomalous  procedure  to  ask  the 
aid  of  the  Jaw  to  assist  one  in  the  violation  of  its  very 
provisions.  If  the  comforting  arm  of  equity  is  to  be  ex- 
tended, it  may  be  done  in  a  proper  proceeding,  and  it 


§  02.]  EXECUTED   CONTKACTS.  8^ 

should  not  support  those  who  seek  its  aid  to  its  own  un- 
doing.^ 

§  62.  Position  of  United  States  siqrreme  court  on  al- 
leged rule. —  This  alleged  rule,  that  a  corporation  cannot 
evoke  the  defense  of  ultra  vires  when  the  other  party  has 

1  The  doctrine  alleged  to  be  established  by  the  Whitney  Arms 
Company  Case,  the  Bissell  Case,  and  others,  is  so  thoroughly  ex- 
ploded and  the  position  there  taken  so  learnedly  combated  by  Mr. 
Taylor  in  his  excellent  work  on  Corporations,  that  it  is  deemed  ad- 
visable and  profitable  to  quote  his  views  rather  fully.  The  learned 
author  says: 

"  The  rules  which  this  case  (Bissell  v.  Michigan  Southern  &  N. 
Ind.  R  R.  Co.,  23  N.  Y.  64)  and  sundry  others  in  New  York  and  else- 
where have  tended  to  establish  may  be  considered  here.  If  the  cor- 
poration has  performed  the  contract  on  its  side,  the  other  contract- 
ing party  cannot  plead  that  the  corporation  was  not  authorized  to 
make  such  a  contract.  This  is  held  by  Whitney  Arms  Co.  v.  Bar- 
low, and  even  in  the  absence  of  all  authority  would  seem  clear. 
'  One  who  has  received  from  a  corporation  the  full  consideration  of 
his  engagement  to  pay  money  .  .  .  cannot  avail  himself  of  the 
objection  that  the  contract  thus  fully  performed  by  the  corporation 
was  ultra  vires  and  not  within  its  chartered  privileges  and  powers.' 
(Whitney  Arms  Co.  v.  Barlow,  63  N.  Y.  70.)  Such  a  person  having 
himself  made  the  contract  and  received  its  benefit  is  clearly  estopped 
from  making  any  such  allegation. 

"  The  converse  of  this  proposition  is  also  said  to  be  law.  If  the 
other  contracting  party  has  performed  his  side  of  the  contract,  the 
corporation  cannot  plead  that  its  charter  gave  it  no  power  to  enter 
into  the  contract,  at  least  if  the  corporate  property  has  been  bene- 
fited by  the  performance.  It  is  submitted  that  this  last  proposition 
involves  a  fallacy.  If  the  other  conti'acting  party  had  contracted 
through  an  agent  whose  instructions  were  contained  in  a  written 
instrument  which  the  corporation  knew  to  contain  all  the  authoi'ity 
which  the  agent  possessed,  and  if  the  contract  in  question  was  un- 
authorized by  this  instrument,  could  any  one  maintain  that  the 
principal  woiild  be  bound  because  the  corporation  had  performed  its 
side  of  the  contract?  Yet  in  reality  it  is  in  analogy  with  this  ta 
hold  the  corporation  bound  because  the  other  contracting  party  has 
performed. 

"To  illustrate, let  us  imagine  that  B.  is  a  land-owner,  A.  his  agent 


90  EXECUTED    CONTRACTS.  [§  62. 

wholly  or  in  part  performed  his  side  of  the  contract,  is 
sought  to  be  invested  with  added  dignity  by  a  citation 
of  several  cases  in  the  federal  supreme  court  where  this 
position  is  asserted  to  have  been  vindicated  and  adopted. 

and  C.  a  manufacturer  of  fertilizers.  If  C,  knowing  that  A.  has  no 
authority  from  B.  to  purchase  fertilizers,  sells  a  large  amount  of 
them  to  be  applied  on  B.'s  lands,  and  they  are  so  applied,  but  with- 
out A.'s  knowledge,  C.  has  executed  the  contract  on  his  side  and 
B.'s  lands  have  had  the  benefit.  Yet  it  is  clear  that  C.  has  no  valid 
claim  against  B.  Apply  this  to  the  case  of  a  corpoi'ation.  Let  B. 
be  the  shareholders  and  creditors;  let  A.  be  the  board  of  directors 
and  C.  the  other  contracting  party,  A.  makes  a  contract  with  C. 
beyond  the  powers  of  the  corporation  —  beyond  A.'s  power  to  repre- 
sent tlie  corporate  interests.  In  legal  intendment  C.  knows  this 
contract  to  be  beyond  A.'s  authority,  but  nevertheless  performs  his 
side  of  it,  and  the  results  of  his  performance  are  applied  to  the 
benefit  of  the  corporate  enterprise,  but  without  the  knowledge  of 
the  shareholders  or  creditors.  Here  the  interests  of  the  sharehold- 
ers and  creditors  have  been  benefited,  but  through  no  voluntary 
action  or  acquiescence  on  their  part,  and  through  acts  which  C. 
knew  they  had  not  authorized.  It  is  again  clear  that  C,  by  his  per- 
formance acquires  no  rights  which  can  afi'ect  the  interests  of  share- 
holders and  creditors.  And  the  same  reasoning  would  apply  even 
if  the  corporation,  by  a  vote  in  corporate  meeting,  i-atified  the  con- 
tract; the  rights  of  absent  or  dissenting  shareholders  would  not 
thereby  be  affected,  provided  they  were  guilty  of  no  laches  in  as- 
serting their  rights.  Undoubtedly,  if  the  shareholders  know  that 
ultra  vires  contracts  are  being  entered  into  and  perforiued,  and  that 
the  proceeds  are  being  applied  to  the  corporate  enterprise,  they  can- 
not witli  honesty  stand  quietly  by,  but  must  do  all  in  their  power  to 
prevent  such  application.  Therefore,  through  acquiescence  after 
they  know,  or,  if  they  have  been  at  all  observant  of  corporate  af- 
fairs, would  have  known,  of  the  contracts,  they  would  be  estopped 
from  objecting.    And  so.  perhaps,  might  creditors  estop  themselves. 

"The  preceding  argument  leads  to  this  unavoidable  conclusion: 
The  mere  facts  that  tlie  other  contracting  party  has  executed  his 
side  of  the  ^dtra  vires  contract,  and  that  the  corporate  property  has 
thereby  been  benefited,  do  not  affect  the  rights  of  i^ersons  who  have 
done  nothing  from  which  assent  to  the  contract  can  in  any  way  be 
inferred, 

"If  one  examines  with  care  the  cases  which  are  regarded  as  au- 


§  63.]  EXECUTED    C0XTEACT3.  91 

These  cases  are,  among  others,  San  Antonio  v.  JMehaffy^ 
06  U.  S.  312;  Railway  Co.  v.  McCarthey,  96  U.  S.  258, 
^nd  Hitchcock  v.  Galveston,  96  U.  S.  311. 

§  63.  San  Antonio  v.  3Iehafy,  96  IT.  S.  312.— In  this 
case  the  only  reference  to  the  doctrine  of  ultra  vires  was 
made  in  a  casual  observation,  purel}"  dictum,  by  Mr.  Jus- 

thority  for  this  alleged  general  rule  that  sounds  so  just  —  if  the  other 
contracting  party  has  performed,  and  by  his  performance  benefited 
the  property'  of  the  corporation,  the  latter  cannot  plead  ultra  vires  — 
it  will  appear  that  the  recovery  of  the  other  party  really  does  not 
rest  on  the  fact  that  he  has  performed,  nor  on  the  fact  that  his  per- 
formance has  benefited  the  corporate  property,  though  undoubtedly 
lie  would  not  have  had  the  same  cause  of  action  had  he  not  per- 
formed ;  and  that  corporate  interests  were  benefited  may  very  likely 
Jiave  been  a  material  point  in  establishing  his  case.  It  is  submitted 
that  in  these  cases  the  plaintiff's  recovery  rests  on  the  circum- 
stances that  all  the  persons  who  would  have  been  entitled  to  object 
to  the  contract  allowed  the  plaintiff  to  go  on  and  perform  under 
the  reasonable  assumption  on  his  part  of  general  acquiescence  in 
the  contract.  To  be  sm-e  the  shareholders  are  not  supposed  to  be 
continually  exercising  an  actual  supervision  over  the  affairs  of  the 
corporation.  But  they  have  a  right  to  inspect  the  books,  and,  if 
■they  choose,  may  keep  themselves  acquainted  with  what  is  being 
done  by  the  corporate  management.  At  any  rate,  unless  they  keep 
a  watch  over  the  course  of  corporate  affairs,  they  will  not  be  entitled 
on  a  plea  of  their  own  ignorance  to  come  forward  at  their  pleasure 
and  cause  the  repudiation  of  corporate  obligations.  Shareholders 
wishing  to  prevent  illegal  or  ultra  vires  acts,  or  to  absolve  the  cor- 
poration from  responsibility  for  them,  must  be  vigilant  and  swift. 

"  Darst  V.  Gale,  83  111.  186,  is  another  case  frequently  cited  in  sup- 
port of  the  alleged  rule  —  which  is  indeed  stated  in  so  many  words 
in  the  opinion  of  the  court  —  'that  a  private  corporation  cannot 
avail  itself  of  the  defense  of  ultra  vires  where  the  contract  has  in 
good  faith  been  fully  performed  by  the  other  party,  and  the  corpo- 
ration has  had  the  benefit  of  the  contract  and  the  performance.'  But 
in  this  case  the  defense  was  not  set  up  by  or  on  behalf  of  the  corpo- 
ration, nor  on  behalf  of  any  person  interested  in  it.  A  subsequent 
grantee  of  premises  belonging  to  the  corporation  attempted  to  have 
a  prior  deed  of  trust  covering  the  same  property  set  aside,  on  the 


92  EXECUTED    COXTRACTS.  [§  63. 

tice  Swayne,  who  used  the  following  language :  "  The  doc- 
trine of  ultra  vires,  whether  invoked  for  or  against  a 
corporation,  is  not  favored  in  the  law.  It  should  never 
be  applied  w^here  it  will  defeat  the  ends  of  justice,  if  such 
result  can  be  avoided."  And  citing  only  Whitney  Arms 
Co.  V.  Barlow,  63  ]^.  Y.  62.  The  doctrine  of  ultra  vires 
was  not  "  invoked  "  in  this  case,  and  the  learned  suo^g'es- 
tion  of  the  justice  was  wholly  gratuitous,  nor  was  its  ap- 

ground  that  such  deed  was  rdtra  vires  the  corporation;  he  having 
bought  with  full  notice  of  the  prior  deed.  The  ^dtra  vires  nature 
of  the  prior  deed  had  injured  no  right  of  his;  and,  consequently,  he 
had  no  standing  in  court  to  interpose  the  plea  of  nltra  vires. 

"The  decision,  if  not  the  reasoning,  in  this  case  points  to  an  im- 
portant principle  respecting  the  plea  of  ultra  vires.  As  we  have 
seen,  the  plea  cannot  be  interposed  by  the  party  contracting  with 
the  corporation  when  the  corporation  has  performed;  and  the  rea- 
son for  this  lies  not  only  in  the  estoppel  in  which,  under  the  circum- 
stances, such  a  person  is  affected,  but  in  the  following  reasons  as 
well:  That  the  transaction  was  ultra  vires  infringes  none  of  his 
rights;  he  cannot,  therefore,  interpose  the  defense.  This  is  a  plain 
principle  which  is  not  only  law,  but  patent  common  sense.  With  a 
few  special  exceptions  no  one  can  represent  another  before  the 
courts  or  elsewhere,  without  authority,  express  or  implied,  to  do  so. 
To  an  action  brought  against  himself  a  man  cannot  ordinarily  plead 
that  the  rights  of  another,  whom  he  is  not  authorized  to  represent, 
will  be  affected  by  the  pi-osecution  of  the  suit.  If  the  court  con- 
sider that  hardship  and  injustice  will  result  unless  the  interests  of 
each  outside  person  are  regarded,  the  court  —  at  least  a  court  of 
equity  —  may  require  him  to  be  made  a  party  to  the  suit,  in  order  to 
afford  him  opportunity  to  protect  his  interests.  Accordingly,  when 
a  contract  iiltra  vires  is  entered  into,  it  is  not  competent  for  persons 
whose  rights  are  not  infringed,  any  more  than  for  those  who  by 
their  actions  have  estopped  themselves  from  complaining,  would 
restrain  the  fulfillment  of  the  contract  on  the  ground  that  the  inter- 
ests of  others,  which  they  are  not  authorized  to  represent,  will  be 
injured.  It  may  therefore  be  stated  as  a  rule  that  a  person  whose 
rights  are  in  no  way  infringed  by  the  fact  that  a  given  act  is  ultra 
vires  a  corporation  can  found  no  action  or  defense  on  that  fact."' 
Taylor  on  Corp.,  §§  275-281. 


§  64.]  EXECUTED    CONTRACTS.  93 

plication  required  in  the  decision  of  the  case,  and  the 
case  cited  shows  very  clearly  that  the  learned  justice  had 
given  the  subject  little  thought  and  less  investigation. 

§  64.  Railway  Co.  v.  McCartliey,  96  U.  8.  mS.—  In 
this  case,  which  has  been  quite  frequently  cited  as  bear- 
ing out  the  alleged  rule  heretofore  referred  to,  it  was  de- 
cided that,  unless  forbidden  by  its  charter,  a  railroad  com- 
pany may  contract  for  a  shipment  over  connecting  lines; 
and  having  done  so  is  liable  in  all  respects  upon  them  as 
upon  its  own  lines;  also  that  where  such  a  contract  is  not, 
on  its  face,  necessarily  beyond  the  scope  of  the  powers 
of  the  corporation,  it  will,  in  the  absence  of  proof  to  the 
contrary,  be  presumed  to  be  valid.  All  of  which  propo- 
sitions are  universally  conceded  and  are  too  clear  to  call 
for  argument  or  authority.  No  reference  is  made  to  the 
defense  of  %dtra  vires  by  a  person  who  has  received  the 
benefit  of  a  contract  executed  by  one  party  or  the  other; 
the  same  justice  who  delivered  the  opinion  of  the  court 
in  the  San  Antonio  case  also  speaking  for  the  court  in 
this  case.  In  the  course  of  this  opinion  he  says :  "  The 
doctrine  of  ultra  vires,  when  invoked  for  or  against  a  cor- 
poration, should  not  be  allowed  to  prevail  when  it  would 
defeat  the  ends  of  justice  or  work  a  legal  wrong;  "  citing 
on  tills  occasion,  Union  Water  Co.  v.  Murjjhy's  Flat  Flus/iy- 
ing  Co.  et  al.,  22  Cal.  620;  Union  Railroad  Co.  v.  Rail- 
road Co.,  29  N.  J.  Eq.  542;  and  the  old  standby,  Whitney 
Arms  Co.  v.  Barlow,  63  I^.  Y.  62.  From  the  cases  here 
cited  it  would  seem  that  the  learned  justice  had  widened 
the  field  of  his  investigation  somewhat,  but  from  the 
lano-uaoje  used  it  is  evident  that  he  cluno^  to  the  same 
opinion  still.  The  latter  part  of  the  sentence  last  quoted 
has  a  lulling  sound  for  those  who  prefer  axioms  to  au- 
thority. Though  often  quoted,  it  has  never  been  clearly 
explained  what  is  meant  by  "  working  a  legal  wrong." 


94:  EXECUTED    CONTRACTS.  [§  G5. 

A  legal  wrong  means,  if  it  means  anything  at  all,  a  wrong 
against  the  law,  and  it  certainly  cannot  be  considered  as- 
a  legal  wrong  to  see  that  the  provisions  of  the  law  are 
vindicated  and  its  terms  complied  with,  in  holding  cor- 
porations strictly  within  their  statutory  powers  and  priv- 
ileges. Whether  it  is  "defeating  the  ends  of  justice"  to 
allow  corporations  to  repudiate  the  unauthorized  and 
illegal  acts  of  their  officers  and  agents  is  also  a  proposi- 
tion we  will  spend  no  time  in  vindicating. 

§  05.  mtclwoclc  V.  Galveston,  96  TJ.  8.  5/^7.— We  now 
come  to  the  bulwark  behind  which  the  adherents  to  the 
alleged  rule  under  discussion  confidently  repose  them- 
selves—  the  case  of  IIHchcochv.  Galveston, —  which  seems 
to  call  for  a  more  extended  examination  to  show  its  in- 
applicability. The  facts  in  that  case  were,  briefly  stated, 
these:  The  city  of  Galveston,  under  an  ordinance,  had, 
through  its  mayor  and  chairman  of  the  committee  on 
streets  and  alleys,  entered  into  a  contract  with  Hitchcock 
and  another  for  paving  the  sidewalks  of  said  city,  for 
which  work  the  city  agreed  to  pay,  and  the  contractors 
agreed  to  accept,  a  specified  sum  per  square  yard,  payable 
in  honds  of  the  city.  While  the  ordinance  of  the  city  em- 
powered the  mayor  and  the  said  chairman  "  to  enter  into 
and  make  contracts  with  proper  and  responsible  parties 
to  fill  up,  grade,  curb  and  pave  the  said  sidewalks,"  the 
city  had  no  power  or  authority  to  issue  honds  in  payment 
of  such  work.  Under  this  agreement  Hitchcock  made 
contracts  for  labor  and  materials,  performed  a  large 
amount  of  work,  completed  the  curbing  and  filling  of  some 
sidewalks,  and  was  going  on  in  earnest  to  finish  the  entire 
work,  when,  at  the  expiration  of  some  forty-six  days,  he 
was  compelled  by  force  and  by  authority  of  the  city  to 
abandon  the  work  without  any  fault  of  his  own.  After- 
wards the  city  council  declared  the  contract  null  and  void, 


§  65.]  EXECUTED    COXTEACTS.  95 

and  directed  the  mayor  to  notify  the  contractors  to  that 
effect,  which  he  did.  Accordingly  suit  was  brought  to 
recover  damages  for  the  Ireach  of  the  contract.  Mr.  Justice 
Stone,  in  delivering  the  opinion  of  the  court,  said : 

"  If  it  were  conceded  that  the  cit}"  had  no  lawful  author- 
ity to  issue  the  bonds  described  in  the  ordinance  and 
mentioned  in  the  contract,  it  does  not  follow  that  the  con- 
tract was  wholly  illegal  and  void,  or  that  the  plaintiffs 
have  no  rights  under  it.  Tfiey  are  not  suing  ^ijyon  the 
hojids,  and  it  is  not  necessary  to  their  success  that  they 
should  assert  the  validity  of  those  instruments.  It  is 
enough  for  them  that  the  city  council  have ])oicer  to  enter 
into  a  contract  for  the  improvement  of  the  sidewalks;  that 
such  a  contract  was  made  with  them;  that  under  it  they 
have  proceeded  to  furnish  materials  and  do  work  as  well 
as  to  assume  liabilities;  that  the  city  has  secured  and  now 
enjoys  the  benefit  of  what  they  have  done  and  furnished; 
that  for  these  things  the  city  promised  to  pay,  and  that 
after  having  received  the  benefit  of  the  contract  the  city 
has  broken  it.  It  matters  not  that  the  promise  was  to 
pay  in  a  manner  not  authorized  by  law.  If  payments 
cannot  be  made  in  bonds  because  their  issue  is  ultra  vires, 
it  would  be  sanctioning  rank  injustice  to  hold  that  pay- 
ment need  not  be  made  at  all.  Such  is  not  the  law.  The 
contract  between  the  parties  is  in  force  so  far  as  it  is  law- 
ful. .  .  .  The  2^1'oniise  to  give  honds  to  the  plaintiffs 
in  payment  of  what  they  undertook  to  do  was,  therefore, 
at  farthest,  only  ultra  vires,  and  in  such  a  case,  though 
specific  2>&^ form  ance  of  an  engagement  to  do  a  thing  trans- 
gressive  of  its  corporate  powers  may  not  he  enforced,  the 
corporation  can  be  held  liable  on  its  contract.  Having 
received  benefits  at  the  expense  of  the  other  contracting 
party,  it  cannot  object  that  it  was  not  empowered  to  per- 
form what  it  promised  in  return,  m^Ae  ttio^^  in  which 
it  promised  to  performP 


96  EXECUTED   CONTRACTS.  [§65. 

There  was  no  question  in  this  case  as  to  the  power  of  the 
city  to  7nake  the  contract  for  paving  the  sidewalks.  How 
payment  should  be  made  was,  at  most,  only  incidental  to 
the  authority  to  make  the  contract.  Had  it  been  decided 
that  the  city  was  devoid  of  power  to  make  the  contract, 
it  would  have  raised  altogether  a  different  phase  of  the 
question.  When  a  corporation  has  the  power  to  make 
certain  contracts,  it  cannot  plead  its  own  irregularity  in 
performing  them.  If  it  has  power  to  make  the  contract 
at  all,  it  is  liable  on  it.  "  Though  specific  performance 
of  an  engagement  to  do  a  thing  transgressive  of  its  cor- 
porate powers  may  not  he  enforced^  the  corporation  can 
be  held  liable  on  its  contract."  By  this  proposition  is 
meant  that  the  corporation  may  be  held  liable  on  its  im- 
plied contract  to  pay  for  what  it  has  received  the  benefit 
of,  as  on  a  quantum  meruit.  Xo  other  construction  can 
be  put  upon  it  with  any  reason.  To  say  that  specific  per- 
formance of  an  agreement  may  not  be  enforced,  yet  the 
corporation  can  be  held  liable  under  the  specific  terms  of 
that  agreement,  is  decidedly  absurd.  It  is  quite  apparent 
that  these  statements  were  made  by  the  learned  justice 
having  in  mind  the  circumstances  connected  with  this 
particular  case.  Does  the  decision  in  this  case  sustain 
the  proposition  laid  down  in  the  Whitney  Arms  Com- 
pany Case  that  a  corporation,  having  received  benefits 
under  a  contract  which  it  had  no  poiver  to  tnake^  if  exe- 
cuted by  the  other  party,  cannot  avail  itself  of  the  defense 
of  ultra  vires  in  an  action  on  that  contract?  It  holds  de- 
cidedly the  reverse,  and  while  admitting  that  the  contract 
cannot  he  enforced  against  the  corporation  in  the  manner 
ia  which  it  agreed  to  perform  it,  yet  it  must  be  held  lia- 
ble for  the  henejits  received  by  the  performance  of  the 
other  party  to  the  contract.  In  other  words,  it  is  liable 
as  for  money  had  and  received — a  clear  repudiation  of  the 


§§  6Q,  67.]  EXECUTED   OONTKACTS.  97 

contract,  and  all  that  it  is  claimed  a  corporation  has  a 
right  to  do. 

§  66.  Jones  v.  Guaranty  Co.,  101  U.  S.  622. —  Jones  v. 
Guaranty  Co.,  supra,  is  another  case  which  has  been  cited 
in  support  of  the  rule  alleged  in  the  Whitney  Arms  Com- 
pany Case.  The  nearest  approach  to  the  proposition  in 
that  case  was  made  in  the  following  language  of  Mr.  Jus- 
tice Swain,  who  delivered  the  opinion  of  the  court: 
"  Where  money  has  been  obtained  by  a  corporation  upon 
its  securities  which  were  irregular  and  ultra  vires,  but  the 
money  was  applied  for  the  benefit  of  the  company  with 
the  knowledge  and  acquiescence  of  the  stockholders,  the 
company  and  the  stockholders  were  estopped  from  deny- 
ing the  liaTjility  of  the  company  to  repay  it.  And  the 
same  result  follows  when  such  securities  are  issued  with 
the  knowledge  of  the  shareholders,  so  far  as  the  money 
thus  raised  is  applied  for  the  benefit  of  the  company." 
If  this  case  sustains  the  alleged  rule  it  is  diflicult  to  under- 
stand the  reasoning  of  its  application. 

§  67.  National  BanTt  v.  Matliews,  98  U.  S.  621.— An- 
other case  which  has  been  cited  with  some  frequency  in 
this  connection  is  that  of  National  BanTc  v.  Mathews. 
The  only  question  raised  in  that  case  was  whether  or  not 
a  bank  which  had  parted  with  its  money  in  good  faith 
could  be  allowed  to  enforce  a  trust  deed  taken  as  security 
for  the  debt,  when  the  other  party  who  had  received  the 
bank's  money  set  up  the  plea  that  such  a  transaction  by 
the  bank  was  ultra  vires  and  illegal;  and  it  was  held  that 
such  a  defense  could  not  be  allowed.  This  decision,  like 
a  great  many  others  frequently  cited,  applies  to  the  party 
contracting  with  the  corporation  and  not  to  the  corpora- 
tion ;  the  reasons  why  such  a  defense  are  not  allowed  in 
such  cases  being  fully  considered  and  explained  by  Mr. 
Taylor,  quoted  in  note  to  section  61. 
7 


98  EXECUTED   CONTKACTS.  [§  68. 

§  68.  Central  Transportation  Co.  v.  Pullman  Car  Co., 

139  U.  S.  ^4- — The  further  consideration  of  this  branch 
of  the  subject  will  be  dismissed  with  a  quotation  from  the 
recent  case  of  Central  Transportation  Co.  v.  PuLhnan  Car 
Co.,  supra,  wherein  Mr.  Justice  Gray  expressly  repudiates 
the  alleged  rule  enunciated  in  the  Whitney  Arms  Case. 
In  the  course  of  his  able  opinion  he  says:  "  It  was  argued 
in  behalf  of  the  plaintiff  that,  having  been  fully  performed 
on  the  part  of  the  plaintiff,  and  the  benefit  of  it  received 
by  the  defendant  for  the  period  covered  by  the  declara- 
tion, the  defendant  was  estopped  to  set  up  the  invalidity 
of  the  contract  as  a  defense  to  this  action  to  recover  the 
compensation  agreed  on  for  that  period. 

"But  this  argument,  though  sustained  by  the  decisions 
of  some  of  the  states,  finds  no  support  in  the  judgments 
of  this  court.  The  passages  cited  by  the  plaintiff  from 
Railway  Co.  v.  MoCarthey,  96  TJ.  S.  258,  267,  and  San 
Antonio  v.  Mehaffy,  96  U.  S.  315,  are  no  more  than  a 
passing  remarh  that  'the  doctrine  of  ultra  vires,  when  in- 
voked for  or  against  a  corporation,  should  not  be  allowed 
to  prevail  when  it  would  defeat  the  ends  of  justice  or 
work  a  legal  wrong,'  and  a  repetition  in  substance  of  the 
same  remark,  adding,  '  if  such  a  result  can  be  avoided.' "  ^ 

1  Mr.  Morawetz,  in  his  admirable  treatise  on  Corporations,  at  page 
551,  section  581,  says: 

"In  some  of  the  cases  it  has  been  said  that,  while  the  general  rule 
is  that  acts  and  contracts  in  excess  of  the  charter  of  a  corporation 
are  ultra  vires,  and  therefore  not  binding  on  a  company,  yet,  after 
a  corporation  has  enjoyed  the  benefit  of  an  act  or  contract  per- 
formed in  its  behalf,  it  will  be  estopped,  when  charged  with  respon- 
sibility on  account  of  the  act  or  contract,  from  setting  up  as  a 
defense  that  the  transaction  was  tiltra  vires. 

"This  statement  of  the  law  is  certainly  inaccurate.  It  has  never 
been  denied  that  the  principles  of  tlie  law  of  agency  apply  to  cor- 
porations and  to  individuals  alike,  and  it  is  certain  that,  according 
to  the  elementary  principles  of  the  law  of  agency,  a  person  does  not 
become  responsible  for  acts  performed  in  his  name  merely  because 


§  68.]  EXECUTED   0ONTRA0T8.  99 

the  acts  have  accrued  to  his  benefit.  A  person  may  become  respon- 
sible for  an  unauthorized  act  performed  in  his  behalf  by  ratifying 
the  act;  but  ratification  would  imply  an  intention  to  adopt  the  un- 
authorized act.  Ratification  by  a  corporation  of  an  act  in  excess  of 
its  charter  means  ratification  by  the  entire  body  of  shareholders; 
no  agent  of  a  corporation  has  authority  to  ratify  an  act  which  he 
had  not  original  authority  to  do.    .    .     . 

"Statements  may  be  found  in  some  of  the  authorities  to  the  effect 
that  'a  plea  of  ultra  ^nres'  should  not  prevail  when  it  would  'ac- 
complish a  legal  wrong.'  These  statements,  however,  refer  merely 
to  the  effect  of  the  legal  prohibition  against  unauthorized  corporate 
acts;  they  mean  that  the  fact  that  a  transaction  is  in  excess  of  the 
charter  of  the  corporation  should  not  be  a  defense  if  there  would 
be  a  liability  according  to  the  general  principles  of  law  applicable 
to  unincorporated  companies.  It  certainly  cannot  be  maintained 
that  the  application  of  the  established  principles  of  the  law  of 
agency  would  'accomplish  a  legal  wrong.'" 

The  learned  author  then  quotes  the  remarks  made  by  Brarawell,  B.^ 
in  the  case  of  Bateman  v.  Mayor  of  Ashton,  3  H.  &  N.  340,  in  the 
court  of  Exchequer  Chamber,  where  the  learned  baron  used  the  fol- 
lowing language:  "I  cannot  help  adding  an  observation  on  the  ob- 
jection made  to  the  honesty  of  a  defense  of  this  description.  It  is 
said  that  the  company  has  contracted,  and  the  company  repudiates 
Its  contract.  There  cannot  be  a  more  perfect  fallacy.  'Persons 
without  authority  have  affected  to  contract  for  the  company,  and 
the  company  repudiates  the  act,'  is  the  true  expression.  A.,  B.  and 
C.  are  in  partnership  as  hatters.  A.  buys  boots  in  the  name  of  the 
firm,  and  the  seller  sues  A.,  B.  and  C,  who  say  they  did  not  contracts 
It  may  be  wrong  in  A.,  but  are  B.  and  C.  to  blame?  I  do  not  say 
the  corporation  cases  are  cases  of  partnership,  but  the  principle  is 
the  same." 

So  the  observation  made  by  Lord  Wensleydale  in  Ernest  v.  Nich- 
olls,  6  H.  L.  400,  would  seem  appropriate  in  this  connection.  He 
there  says:  "It  is  a  captivating  argument  for  a  jury,  and  jury- 
men are  very  often  misled  by  it  in  these  cases  of  joint-stock  com- 
panies, that  the  company  has  had  the  benefit  of  the  plaintiff's  goods^ 
or  service,  or  money,  whereas,  for  the  purposes  of  contract,  the  com- 
pany exists  only  in  the  directors  and  officers,  acting  by  and  according 
to  the  deed." 

The  learned  lord  might  also  truly  have  added  that  courts  likewise 
are  often  captivated  and  misled  by  the  same  specious  plea,  losing 
sight  altogether  of  the  true  issue  involved  and  resting  their  decis- 
ions on  the  doubtful  consideration  of  individual  hardship. 


CHAPTER  Y. 

ACTIONS  ON  ULTRA  VIRES  CONTRACTS. 

§  69.  General  rule  as  to  actions  on  illegal  contracts. 

70.  Ultra  vires  as  defense  to  action  —  General  rule. 

71.  Court  must  be  satisfied  of  legality  of  contract. 

72.  Actions  on  executed  ultra  vires  contracts. 

73.  Actions  on  ultra  vires  contracts  in  courts  of  equity  and  at  law. 

74.  Quantum  meruit — Relief  on  %dtra  vires  contracts. 

75.  Relief  on  contracts  ultra  vires  and  under  statute  of  frauds. 

§  69.  General  rule  as  to  actions  on  illegal  contracts. — 
It  is  a  general  rule  of  law  that  a  contract  made  in  viola- 
tion of  a  statute  is  void ;  and  that  when  a  plaintiff  cannot 
establish  his  cause  of  action  without  relying  upon  an  ille- 
gal contract  he  cannot  recover.^  It  is  likewise  well  settled 
by  the  authorities  that  any  promise,  contract  or  under- 
taking, the  performance  of  which  would  tend  to  promote, 
advance  or  carry  into  effect  any  object  or  purpose  which 
is  unlawful,  is  in  itself  void,  and  will  not  maintain  an 
action.  The  law  which  prohibits  the  end  will  not  lend 
its  aid  in  promoting  the  means  designed  to  carry  it  into 
effect,  and  in  this  respect  the  law  gives  no  countenance 
to  the  old  distinction  between  malum  in  se  and  malum 
pr'ohihitmn.  That  which  the  law  prohibits  either  in 
terms,  or  by  affixing  a  penalty  to  it,  is  unlawful;  and  it 

1  Pollock's  Prin.  of  Cont.,  pp.  253-265;  Penn  v.  Bornman,  102  III. 
523;  Alexander  V.  O'Donnell,  12  Kan.  608;  Gunter  v.  Leckey,  80  Ala. 
591;  Kennedy  v.  Cochran,  65  Me.  594;  Bank  of  U.  S.  v.  Owens,  2  Pet. 
(U.  S.)  527,  539;  Pangborn  v.  Westlake,  36  Iowa,  546;  Harris  v.  Run- 
nells,  12  How.  (U.  S.)  79;  Miller  v.  Amnion,  145  U.  S,  426;  American 
Pres.  Trust  Co.  v.  Taylor  Mfg.  Co.,  46  Fed.  Rep.  155. 


§  69.]  ACTIONS  ON  CONTEACTS.  101 

will  not  promote  in  one  form  that  which  it  declares  wrong 
in  another.  So  the  rule  is  declared  as  general  that  all 
contracts  or  agreements  which  have  for  their  objects  any- 
thing which  is  repugnant  to  the  general  policy  of  the  law, 
or  contrary  to  the  provisions  of  any  statute,  are  void  and 
not  to  be  enforced.^  It  is  a  principle  too  salutary  and 
well  established  to  be  in  any  measure  infringed,  and  courts 
of  justice  ought  not  to  assist  an  illegal  transaction  in  any 
respect.^  Though  the  objection  that  a  contract  is  illegal 
or  ultra  vires  may  sound  at  all  times  very  ill  in  the  mouth 
of  a  defendant,  it  is  not  for  his  sake  that  the  objection  is 
ever  allowed,  but  it  is  founded  in  general  principles  of 
policy;  and  whenever  from  the  plaintiff's  own  stating, 
or  otherwise,  the  cause  of  action  appears  to  arise  from 
the  transgression  of  a  positive  law  of  the  country,  he  has 
no  right  to  be  assisted.^  ]S'or  will  courts,  even  with  the 
consent  of  the  parties,  enforce  a  contract  which  is  in  vio- 
lation of  a  statute,  although  not  otherwise  declared  void.* 
"  There  is  a  great  difference  where  a  party  comes  to  over- 
turn an  illegal  contract  and  to  be  relieved  against  it.  He 
shall  not  be  relieved  if  he  come  to  take  the  benefit  of  an 
illegal  contract;  there  he  never  shall  be  relieved,  because, 
to  relieve  him,  the  court  must  aiRrm  the  contract."  ^    So 

1  White  V.  Bass,  3  Cush.  (Mass.)  448;  1  Comyn,  Cont.  30;  Hunt  v. 
Knickerbocker,  5  John.  (N.  Y.)  326;  Guenther  v.  Dewein,  11  Iowa, 
133;  Craig  v.  Andreas,  7  Iowa,  17;  Pittsburg  v.  Keokuk  Bridge,  131 
U.  S.  371;  Oregon  Ry.  v.  Oregonian  Ry.,130  U.  S.  1;  Thomas  v.  Rail- 
way Ca,  101  U.  S.  71;  Central  Trana  Co.  v.  Pullman  Co.,  139  U.  S. 
24;  Spring  Co.  v.  Knowlton,  103  U.  S.  49. 

2Belding  v.  Pitkin,  2  Caines  (N.  Y.),  149. 

3  Lord  Mansfield  in  Holmes  v.  Johnson,  Cowp.  343. 

4  Fowler  v.  Scully,  72  Pa.  St.  456. 

5  Walker  v.  Chapman,  Lofft,  342;  Toppenden  v.  Randall,  2  Bos.  & 
Pull.  467;  Chitty,  Cont.  533;  White  v.  Franklin  Bank,  22  Pick.  (Mass.) 
184;  Aubert  v.  Walsh,  3  Taunt.  277;  Busk  v.  Wash,  4  id.  290;  Will- 
iams V.  Hedley,  8  East,  380,  n.;  Hastelow  v.  Jackson,  8  B.  &  C.  224; 


102  ACTIONS    ON    CONTRACTS.  [§  70. 

when  a  contract  is  tainted  with  illegality  the  law  will  not 
lend  its  aid  to  either  party  for  the  enforcement  of  such 
contract;  and  neither  a  court  of  law  nor  of  equity  will 
interpose  to  grant  any  relief  to  the  parties,  but  will  leave 
them  where  it  finds  them,  if  they  have  been  equally  cog- 
nizant of  the  illegality.^  "The  attempt  to  contravene 
the  policy  of  a  public  statute  is  illegal.  ISTor  is  it  neces- 
sary to  render  it  so  that  the  statute  should  contain  an  ex- 
press prohihition  of  such  attempt.  It  always  contains  an 
implied  prohibition ;  and  to  such  attempts  the  principles 
of  the  common  law  are  invariably  and  deadly  hostile,  not 
always  by  an  interference  between  the  parties  themselves, 
or  by  enabling  the  one  to  recall  to  the  other,  where  in 
pari  delicto,  what  may  have  been  obtained ;  but  by  at  all 
times  refusing  the  aid  of  the  law  to  carry  into  effect  or 
enforce  any  contract  which  may  be  the  result  of  such  in- 
tended contravention."  ^ 

§  70.  Ultra  vires  as  defense  to  action  —  General  rule. —  It 
is  upon  the  principles  stated  in  the  next  preceding  sec- 
tion that  it  has  been  so  frequently  held  that  a  contract 
made  by  the  ofiicers  or  agents  of  a  corporation  which  is 
outside  the  pale  of  the  corporate  power  confers  no  rights ; 
and  the  making  of  such  contract  does  not  estop  the  cor- 
poration, in  an  action  on  it,  from  invoking  the  defense  of 
ultra  vires.^     Accordingly  the  rule  may  be  declared  as 

Utica  Ins.  Co.  v.  Kip,  8  Cow.  (K  Y.)  20;  Fowler  v.  Scully,  73  Pa.  St. 
456. 

1  7  Wait,  Act.  &  Def.  64;  Smith  v.  Bromley,  2  Doug.  696;  Birming- 
ton  V.  Wallis,  4  B.  &  Aid.  650;  Cowan  v.  Milburn,  2  Exch.  230;  Low- 
ell V.  Boston,  etc.  R.  Co.,  23  Pick.  (Mass.)  33;  Barker  v.  Hoff,  7  Hun 
<N.  Y.),  284;  Blasdell  v.  Fowler,  120  Mass.  447. 

2Sharpe  v.  Teese,  9  N.  J.  L.  352. 

3 Sherwood  V.  Alvis,  83  Ala.  115;  Smith  v.  Insurance  Co.,  4  Ala, 
558;  City  Council  v.  Plank  Road  Co.,  31  Ala.  76;  Chewacla  Lime 
Works  V.  Dismukes,  87  Ala.  347;  Abbott  v.  Packet  Co.,  1  Md.   Ch. 


§  70.]  ACTIONS   OlSr   CONTRACTS.  103 

general,  that  any  contract  made  by  a  corporation  not 
necessary  and  proper,  directly  or  indirectly,  to  enable  it 
to  answer  the  purpose  of  its  creation,  is  void,  and  neither 
a  court  of  law  or  of  equity  can  enforce  it.'  No  perform- 
ance by  the  corporation  of  such  a  contract  can  give  it 
any  validity,  or  be  the  foundation  of  any 'right  of  action 
upon  it.2  So,  w^here  a  third  party  makes  with  the  officers 
of  a  corporation  an  illegal  contract  —  beyond  the  powers 
of  the  corporation  as  shown  by  its  charter,  —  such  third 
party  cannot  recover  on  the  contract^  because  he  acts  witli 
knowledge  that  the  officers  have  exceeded  their  powers 
and  the  powers  of  the  corporation,  and  between  him  and 
the  corporation  or  its  stockholders  no  amount  of  ratifica- 
tion by  those  unauthorized  to  make  the  contract  will 
make  it  valid.^ 

542;  Brady  v.  Mayor,  20  N.  Y.  312;  Taft  v.  Pittsford,  28  Vt.  286; 
Franklin  Co.  v.  Lewiston  Inst.,  68  Me.  43;  Root  v.  Goddard,  3  Mc- 
Lean (U.  S.),  102;  Ex  parte  Williamson,  5  Ch.  Div.  309;  South  York- 
shire Ry.  V.  Great  Northern  Ry.  Co.,  9  Exch.  55;  Bateman  v.  Ash- 
ton-under-Lynn,  3  H.  &  N.  323;  Norwich  v.  Norfolk  Ry.,  4  El.  &  Bl. 
397;  Taylor  v,  Chichester,  etc.  Ry.,  L.  R.  2  Exch.  356;  East  Anglian 
Ry.  V.  Eastern  Counties  Ry.,  11  C.  B.  775;  MacGregor  v.  Dover  &  D. 
Ry.,  18  Q.  B.  618;  Bagshaw  v.  Eastern  Union  Ry.,  2  Macn.  &  G.  389; 
Earl  of  Shrewsbury  v.  North  Staf.  Ry.  Co.,  1  Eq.  Rep.  593;  Chambers  v. 
Manchester,  etc.  Ry.  Co.,  5  B.  &  S.  588;  In  re  Building  Society,  5  Ch. 
App.  309;  Gregory  v.  Patchett,  33  Beav.  595;  Shrewsbury,  etc.  Ry. 
V.  Northwestern  Ry.,  6  H.  L.  Cas.  113;  Gage  v.  Newmarket  Ry.,  18 
Q.  B.  457;  Caledonia  Ry.  Co.  v.  Helensburgh,  2  Macq.  391;  Pearce 
V.  Madison  Ry.  Co.,  21  How.  (U.  S.)  441;  Thomas  v.  Railroad  Co..  101 
U.  S.  71;  Head  v.  Providence  Ins.  Co.,  2  Cranch  (U.  S.),  127;  Central 
Trans.  Co.  v.  Pullman  Co.,  139  U.  S.  24,  and  cases  cited  to  §^  9,  53. 

1  Alabama  Ins.  Co.  v.  Central  Ass'n,  54  Ala.  73;  Grand  Lodge  v. 
Waddell,  36  Ala.  313;  Chambers  v.  Falkner,  65  Ala.  448;  Sherwood 
V.  Alvis,  83  Ala.  117;  Simmons  v.  Troy  Works,  93  Ala.  427,  and  cases 
cited  in  preceding  note. 

2 Central  Trans.  Co.  v.  Pullman  Co.,  139  U.  S.  24;  Thomas  v.  Rail- 
way Co.,  101  U.  S.  71;  Orr  v.  Lacey,  2  Doug.  (Mich.)  230;  Littlewort 
V.  Davis,  50  Miss.  403. 

3  Allegheny  City  v.  McClurkan,  14  Pa.  St.  81 ;  Holdsworth  v.  Evans, 


104:  ACTIONS   ON   CONTKAOTS.  [§  '''I- 

§  Tl.  Court  must  te  satisfied  of  legality  of  contract. — 
Before  the  court  can  act  in  the  exercise  of  its  peculiar 
jurisdiction  to  enforce  specific  performance  of  an  agree- 
ment, it  must  be  satisfied  that  there  is  not  a  reasonable 
ground  for  contending  that  the  agreement  is  illegal  or 
against  the  policy  of  the  law ;  ^  and  in  the  next  place  that 
the  agreement  is  one  ascribable  to  a  class  in  which  the 
court  has  been  accustomed  or  has  certainly  jurisdiction 
to  interfere.^  In  Hunt  v.  KnicTcerhocTcer,  5  Johns.  377, 
Mr.  Justice  Thompson,  speaking  for  the  court,  said :  "  No 
case,  I  believe,  can  be  found  where  an  action  can  be  sus- 
tained which  goes  in  affirmance  of  an  illegal  contract, 
and  when  the  object  of  it  is  to  enforce  the  performance 
of  an  engagement  prohibited  by  law.  Wherever  an  ac- 
tion has  been  sustained  against  a  party  to  prevent  him 
from  retaining  the  benefit  derived  from  an  unlawful  act, 
the  action  proceeds  in  disaffirmance  of  the  contract^  and, 
instead  of  endeavoring  to  enforce  it,  presumes  it  to  be 
void."     So  also,  in    Union  PacifiG  Ry.  Co.  v.   Chicago, 

3  H.  L.  263;  Ex  parte  Grady,  9  Jur.  (N.  S.)  631;  Lucas  v.  White  Line 
Tr.  Co.,  70  Iowa,  541 ;  National  Trust  Co.  v.  Miller,  33  N.  J.  Eq.  155; 
Black  V.  Del.  &  R.  Canal  Co.,  24  N.  J.  Eq.  455;  Thomas  v.  Railway  Co., 
101  U.  S.  71;  Mallory  v.  Hanauer  Oil  Co.,  86  Tenn.  598. 

1  Johnson  v.  Shrewsbury,  etc.  Co.,  3  De  G.,  M.  &  G.  913;  Hunt  v. 
Knickerbocker,  5  Johns.  (N.  Y.)  326;  Union  Pac.  Ry.  Co.  v.  C,  R.  L 
&  P.  Ry.,  51  Fed.  Rep.  309;  Laughton  v.  Hughes,  1  Mau.  &  Selw.  593; 
Holmes  v.  Johnson,  Cowp.  343;  Morch  v.  Abel,  3  B.  &  P.  35;  Russell 
V.  De  Grand,  15  Mass.  39;  Shiffner  v.  Gordon,  12  East,  304;  Cincin- 
nati Co.  V.  Rosenthal,  55  111.  85;  Thomas  v.  Railway  Co.,  101  U.  S.71. 

2  Johnson  v.  Shrewsbury,  etc.  Ry.  Co.,  3  De  G.,  ^L  &  G.  913. 

In  Laughton  v.  Hughes,  supra,  Lord  EUenborough  said:  "It  may 
be  taken  as  a  general  rule  that  what  is  done  in  contravention  of  the 
provisions  of  an  act  of  parliament  cannot  be  made  the  subject-mat- 
ter of  an  action." 

And  Le  Blanc,  J.,  in  same  case,  said:  "It  is  an  established  princi- 
ple that  the  court  will  not  lend  its  aid  in  order  to  enforce  a  contract 
entered  into  with  a  view  of  carrying  into  effect  anything  which  is 
prohibited  by  law." 


§  T2.]  ACTIONS   ON   OONTEAOTS.  105 

Rock  Islcmd  c&  Pacific  By.  Co.,  51  Fed.  Eep.  309,  which 
was  a  suit  to  compel  specific  performance  of  a  con- 
tract for  joint  use  and  occupancy  of  a  bridge  across  the 
Missouri  river,  and  which  was  held  not  be  ultra  vires  and 
that  such  joint  use  would  not  interfere  with  the  present 
or  prospective  use  thereof  by  the  lessor,  or  with  the  dis- 
charge of  the  duties  it  owed  to  the  government  under 
the  provisions  of  its  charter,  Sanborn,  C.  J.,  delivering 
the  opinion  of  the  court,  said:  "Corporations  created 
under  statutory  authority  are  the  creatures  of  the  stat- 
ute. By  it  their  powers  are  measured.  Beyond  the  limit 
of  the  powers  there  granted,  and  those  fairly  incidental 
thereto,  they  may  not  act;  they  may  not  agree  to  act. 
Their  contracts  for  the  just  exercise  of  these  powers  are 
binding  and  enforceable ;  but  their  contracts  beyond  the 
scope  of  these  granted  powers  are  null  —  as  though  they 
had  not  been.  They  are  void  as  against  the  state,  be- 
cause they  are  unlawful  usurpations  of  power  reserved 
by  the  state.  The}'-  are  void  as  against  other  parties  to 
the  contract,  because  they  are  bound  to  take  notice  of  the 
law  of  the  limits  of  corporate  powers  there  found ;  and 
no  formal  assent  of  corporations  or  officers,  no  alleged 
estoppel,  can  give  validity  to  such  contracts,  or  induce  the 
courts  to  enforce  them  against  the  objection  of  the  citizen 
or  the  state," 

§  72.  Actions  on  executed  ultra  vires  contracts. —  It  is 
the  generally  accepted  doctrine  of  the  courts  of  England 
and  a  large  majority  of  the  courts  of  this  country,  where 
the  subject  has  been  well  considered,  that  a  contract  be- 
yond the  scope  of  the  powers  conferred  on  the  corpora- 
tion cannot,  by  any  partial  performance,  become  the 
foundation  of  any  right  of  action.^    The  reason  for  this 

1  Thomas  v.  Eailway  Co.,  101  U.  S.  71 ;  Oregon  Ry.  v.  Oregonian 
Ry.,  130  U.  S.  1;  Central  Trans.  Co.  v.  Pullman  Co.,  139  U.  S.  24; 


106  ACTIONS    ON   CONTEACTS.  [§  Y2. 

rule  is  forcibly  stated  by  Mr.  Justice  Miller  in  Thomas  v. 
Hailroad  Co.,  a  leading  case:  "It  remains  to  consider 
the  suggestion  that  the  contract,  having  been  executed, 
the  doctrine  of  ultra  vires  is  inapplicable  to  the  case. 
There  can  be  no  question  that,  in  many  instances,  where 
an  invalid  contract,  which  the  party  to  it  might  have 
avoided  or  refused  to  perform,  has  been  fully  performed 
on  l)oth  sides,  whereby  money  has  been  paid  or  property 
has  changed  hands,  the  courts  have  refused  to  sustain  an 
action  for  the  recovery  of  the  property  or  the  money  so 
transferred.  .  .  .  Having  entered  into  the  agree- 
ment, it  w^as  the  duty  of  the  company  to  rescind  or  aban- 
don it  at  the  earliest  moment.  .  .  .  Though  they 
delayed  for  several  years,  it  was  nevertheless  a  rightful 
act  when  it  was  done.  Can  this  performance  of  a  legal 
duty,  a  duty  both  to  stockholders  and  the  company  and 
to  the  public,  give  to  plaintiffs  a  right  of  action?  Can 
they  found  such  a  right  on  an  agreement  void  for  want 
of  corporate  authority  and  forbidden  by  the  policy  of 
the  law?  To  hold  that  they  can  is,  in  our  opinion,  to  hold 
that  an  act  performed  in  executing  a  void  contract  malces 
all  its  parts  valid,  and  that  the  more  that  is  done  under  a 
contract  forbidden  hy  law  the  stronger  is  the  claim  to  its 
enforcement  hy  the  courts^  ^ 

Pennsylvania  Co.  v.  St.  Louis  Ry.  Co.,  118  U.  S.  310;  Greenville  Com- 
press V.  Planters'  Press,  70  Miss.  669;  Ashbury  Ry.  Co.  v.  Riclie,  7 
H.  L.  653;  East  Anglian  Ry.  v.  Eastern  Counties  Ry.  Co.,  11  C.  B. 
775;  National  Trust  Co.  v.  Miller,  33  N.  J.  Eq.  155;  Black  v.  Dela- 
ware, etc.  Co.,  24  N.  J.  Eq.  455;  Buckeye  Marble  Co.  v.  Harvey,  92 
Tenn.  115. 

1  So  Cooper,  J.,  in  Greenville  Compress  v.  Planters'  Press,  70  Miss. 
669,  says:  "The  agreement  between  the  directors  of  the  respective 
companies  "was  clearly  beyond  the  corporate  powers  of  either  com- 
pany to  make,  and  it  had  not  been  fully  executed  when  the  appel- 
lant withdrew  from  it.  There  are  some  decisions  which  proceed  on 
the  apparent  postulate  that  an  ultra  vires  agreement,  executed 


§  T3.]  ACTIONS    ON   CONTKACTS.  107 

§  73.  Actions  on  ultra  vires  contracts  in  courts  of  equity 
and  at  law. —  The  general  rule,  in  equity  as  at  law,  is  in 
pari  delicto  jpotior  est  conditio  defendentis;  and  therefore 
neither  party  to  an  illegal  contract  will  be  aided  by  the 

fully  by  one  of  the  corporations,  or  so  far  executed  tliat  the  status 
quo  cannot  be  restored,  may  be  made  the  basis  of  an  action.  But 
in  many  of  these  cases  it  will  be  found  that  the  measure  of  recov- 
ery would  be  the  same,  whether  the  injury  done  to  the  plaintiff  by 
the  failure  of  the  defendant  to  perform,  or  the  benefit  received  by 
the  defendant  under  the  agreement,  is  takeij  as  the  standard.  Cases 
of  this  sort  may  therefore  be  well  assigned  to  that  other  and  far 
more  numerous  class,  in  which  the  right  of  recovery  is  not  rested 
upon  the  invalid  agreement,  but  is  recognized  to  exist  notwith- 
.standing  the  agreement,  upon  the  principle  that  the  defendant  may 
not  repudiate  the  contract  and  yet  retain  the  benefit  which  has 
been  derived  under  it. 

"The  decided  weight  of  authority  in  England  and  America  is 
that  no  action  lies  upon  the  void  contract;  that  no  decree  can  be 
made  by  a  court  of  equity  for  its  specific  performance,  nor  a  recov- 
ery had  at  law  for  its  breach:  but  that,  by  proceeding  in  tlie  proper 
court,  the  plaintiff  may  recover  to  the  extent  of  the  benefit  received 
by  the  defendant  from  the  execution  of  the  agreement  by  the 
plaintiff."  And  see  Union  Pac.  Ry.  Co.  v.  C,  R.  I.  &  P.  Ry.  Co.,  51 
Fed.  Rep.  309;  Laughton  v.  Hughes,  1  Mau.  &  Sel.  593;  Holman  v. 
Johnson,  Cowp.  .343;  Morck  v.  Abel,  3  B.  &  P.  35;  Russell  v.  De  Grand, 
15  Mass.  39;  Sheffner  v.  Gordon,  12  East,  304;  Selwyn,  Nisi  Prius,  69; 
Mayor  v.  Norfolk  Ry.,  4  EI.  &  Bl.  397;  Cincinnati  Co.  v.  Rosen- 
thal, 55  111.  85;  Greenville  Compi'ess  v.  Planters'  Press,  70  Miss.  669; 
Buckeye  Marble  Co.  v.  Harve}-,  92  Tenn.  115. 

In  Buckeye  Marble  Co.  v.  Harvey,  supra,  in  the  supreme  court  of 
Tennessee,  1892,  Lurton,  J.,  in  speaking  of  the  defense  of  ultra  vires 
where  the  contract  had  been  executed,  said: 

"  But  it  has  been  insisted  very  earnestly  by  the  able  and  learned 
counsel  for  complainant,  that,  when  the  contract  had  been  fully 
executed  by  the  plaintiff,  the  defendants  should  not  be  permitted 
to  invoke  such  defense  in  a  suit  brought  to  compel  performance; 
that  to  permit  such  a  defense  would  work  injustice,  and  enable 
defendant  to  repudiate  his  liability  while  holding  on  to  the  price 
he  has  received.  There  are  cases  where,  the  contract  being  fully 
executed  on  both  sides,  the  court,  in  the  interest  of  justice,  has  re- 
fused to  aid  either  in  obtaining  a  rescission.     Arms  Co.  v.  Barlow,  63 


108  ACTIONS   ON    CONTJRAOTS.  [§  73. 

court,  wb  ether  to  enforce  it  or  to  set  it  aside.  If  tlie 
contract  is  illegal,  affirmative  relief  against  it  will  not  be 
granted,  at  law  or  in  equity,  unless  the  contract  remains 
executory,  or  unless  the  parties  are  not  considered  in 

N.  Y.  62,  is  one  of  this  class.  So  there  are  cases  where  the  defense 
of  ultra  vires  has  not  been  entertained  when  the  defect  was  in  the 
mode  of  executing  the  contract  or  in  the  power  of  the  agent.  So 
there  are  many  cases  holding  the  party  relying  upon  the  defense  of 
tiltra  vires  to  an  accountability  for  the  benefit  received.  Green's 
Brice's  Ultra  Vires,  717,  ^nd  note  at  end  of  chapter.  Again  there 
are  cases  when  the  courts  have  refused  to  entertain  suits  to  recover 
property  from  corporations  which  is  held  in  excess  of  charter  capac- 
ity. In  such  cases  the  courts  have  held  that  the  defect  in  the  power 
could  not  be  set  up  in  a  collateral  way,  and  that  the  state  could  only 
complain  of  such  violation.  To  this  effect  were  our  own  cases  of 
Barrow  v.  Turnpike  Co.,  9  Humph.  303,  and  Heiskell  v.  Lodge,  87 
Tenn.  668.  The  question  here  is  not  like  any  of  these.  The  com- 
plainant sues  upon  its  contract,  and  in  affirmance  of  it  seeks  to  have 
the  defendant  perform  an  agreement  which  sprung  from  and  was 
collateral  to  it.  It  has  received  the  shares  it  purchased  and  holds 
onto  them.  It  simply  asks  that  the  defendant  be  further  compelled 
to  perform  its  contract  by  contributing,  in  accordance  with  his 
agreement,  his  proportion  of  the  liability  paid  off  by  complainant 
in  protection  of  the  property  of  the  McMillan  Marble  Company.  The 
suit  is  clearly  in  furtherance  of  the  original  unlawful  and  void  con- 
tract. That  the  contract  has  been  executed  by  the  plaintiff  does 
not  make  it  lawful  or  entitle  it  to  an  enforcement  of  it.  This  prop- 
osition was  very  plainly  put  in  Pittsburg,  C.  &  St.  L.  Ey.  Co.  v.  Keo- 
kuk &  H.  Bridge  Co.,  where  it  was  stated  as  a  result  of  all  the  pre- 
vious discussions  of  that  court  upon  this  subject,  that  'a  contract 
made  by  a  corporation,  which  is  unlawful  and  void  because  beyond 
the  scope  of  its  corporate  powers,  does  not,  by  being  carried  into 
effect,  become  lawful  and  valid;  but  the  proper  remedy  for  the 
party  aggrieved  is  by  disaffirming  the  contract  and  suing  to  recover 
as  on  a  quantum  Tneruit  the  value  of  what  the  defendant  has  actu- 
ally received.'  131  U.  S.  389.  The  case  of  Central  Transportation 
Co.  V.  Pullman  Car  Co.  is  an  exceedingly  interesting  case,  as  it  in- 
volves a  consideration  of  the  circumstances  under  which  a  defend- 
ant may  interpose  the  defense  of  tdtra  vires,  notwithstanding  full 
performance  by  the  plaintiff.  In  that  case  the  Central  Transportation 
Company  had  leased  and  transferred  all  its  property  of  every  kind  to 


§  73.]  ACTIONS    ON   CONTEACTS.  109 

equal  fault,  or  where  the  law  violated  is  intended  for  the 
coercion  of  the  one  party  and  the  protection  of  the  other, 
or  where  there  has  been  fraud  or  oppression  on  the  part 
of  the  defendant.^    The   difference,   however,   between 

the  defendant  company,  which  was  engaged  in  a  similar  and  compet- 
itive business.  The  lessee  company  undertook  to  pay  all  the  debts  of 
the  lessor  company,  and  to  pay  it  annually  the  sum  of  §264,000  for  a 
term  of  ninety-nine  years.  Possession  was  taken,  and  the  instal- 
ments paid  for  a  number  of  years.  The  suit  was  for  a  part  of  the 
instalment  for  the  last  year  before  suit.  The  defense  of  ultra  vires 
was  interposed  and  sustained.  The  court  held  that  the  sale  was  un- 
authorized and  in  excess  of  the  powers  of  the  selling  company.  It 
was  urged  for  the  plaintiffs,  as  in  this  case,  that  even  if  the  contract 
was  void  because  idtra  vires  and  against  public  policy,  yet  that  hav- 
ing been  fully  executed  on  the  part  of  the  plaintiff,  and  the  benefits 
of  it  received  by  the  defendant  for  the  period  covered  by  its  dura- 
tion, the  defendant  was  estopped  to  set  up  the  invalidity  of  the  con- 
tract as  a  defense  to  an  action  to  recover  the  compensation  agreed 
on  for  that  period.  After  reviewing  its  own  decisions  on  this  branch 
of  the  case  the  court  said:  'The  view  which  the  court  has  taken  of 
the  question  presented  by  this  branch  of  the  case,  and  the  only  view 
which  appears  to  us  consistent  with  legal  principles,  is  as  follows: 
A  contract  of  a  corporation  which  is  ultra  vires  in  the  proper  sense, 
that  is  to  say,  outside  the  objects  of  its  creation  as  defined  in  the 
law  of  its  organization,  and  therefore  beyond  the  powers  conferred 
upon  it  by  the  legislature,  is  not  voidable  only,  but  wholly  void,  and 
of  no  legal  effect.  The  objection  to  the  contract  is  not  merely  that 
the  corporation  ought  not  to  have  made  it,  but  that  it  could  not 
make  it.  The  contract  cannot  be  ratified  by  either  party  because  it 
could  not  have  been  authorized  by  either.  No  performance  on  either 
side  can  give  the  unlawful  contract  any  validity,  or  be  the  founda- 
tion of  any  right  of  action  upon  it.  When  a  corporation  is  acting 
within  the  general  scope  of  the  powers  conferred  upon  it  by  the 
legislature,  the  corporation,  as  well  as  persons  contracting  with  it, 
may  be  estopped  to  deny  that  it  has  complied  with  the  legal  formal- 
ities which  are  prerequisite  to  its  existence  or  to  its  action,  because 
such  requisites  might  in  fact  have  been  complied  with.  But  when 
the  contract  is  beyond  the  power  conferred  upon  it  by  the  existing 

1  St.  Louis  Ry.  v.  T.  H.  R.  R.,  145  U.  S.  407;  Thomas  v.  Richmond, 
12  Wall.  (U.  S.)  349;  Spring  Co.  v.  Knowlton,  10 J  U.  S.  49. 


110  ACTIONS   ON   CONTRACTS.  [§  T3. 

courts  of  law  and  those  of  equity  in  respect  of  such  con- 
tracts is  mainly  one  of  forms  and  remedies,  rather  than 
in  the  matter  of  absolute  rights  and  oblio:ations.  If  a 
contract  be  pronounced  absolutely  void  in  a  court  of  law, 

law,  neither  the  corporation  nor  the  other  party  to  the  contract  can 
be  estopped  by  assenting  to  it,  or  by  acting  upon  it,  to  show  that  it 
was  prohibited  by  those  laws.  ...  A  contract  ultra  vires  being 
unlawful  and  void,  not  because  it  is  in  itself  immoral,  but  because 
the  corporation,  by  the  law  of  its  creation,  is  incapable  of  making 
it,  the  courts,  while  refusing  to  maintain  any  action  upon  the  un- 
lawful contract,  have  always  striven  to  do  justice  between  the  par- 
ties, so  far  as  could  be  done  consistently  with  adhei'ence  to  law,  by 
permitting  money  or  property  parted  with  on  the  faith  of  the  un- 
lawful contract  to  be  recovered  back  or  compensation  to  be  made 
for  it.  In  such  case,  however,  the  action  is  not  maintained  upon 
the  unlawful  contract,  nor  according  to  its  terms,  but  on  an  implied 
contract  of  the  defendant  to  return,  or,  failing  to  do  tliat,  to  make 
compensation  for  property  or  money  which  it  has  no  right  to  retain. 
To  maintain  such  an  action  is  not  to  affirm  but  to  disaffirm  the 
unlawful  contract.'  139  U.  S.  60.  This  seems  to  us  to  fully  and 
clearly  state  the  rule.  The  passage  cited  by  counsel  from  Railway 
Co.  V.  McCarthey,  96  U,  S.  267, '  that  the  doctrine  of  ultra  vires,  when 
invoked  for  or  against  a  corporation,  should  not  be  allowed  to  pre- 
vail when  it  would  defeat  the  ends  of  justice  or  work  a  legal  wrong,' 
is  misleading,  and,  if  literally  construed,  would  result  in  an  errone- 
ous practical  extension  of  the  powers  of  corporations.  We  do  not 
understand  that  a  result  required  by  adherence  to  the  law  would 
be  either  unjust  or  a  legal  wrong.  The  learned  judge  doubtless  in- 
tended to  be  understood  that  the  defense  should  be  a  legal  wrong 
only  when  the  law  did  not  require  its  consideration  by  the  court. 

"This  passage,  and  one  of  similar  character  in  San  Antonio  v. 
Mehaffy,  96  U.  S.  812,  was  uncalled  for  in  the  case  in  which  it  was 
used,  and  in  Central  Transportation  Co.  v.  Pullman  Car  Co.,  supra, 
characterized  as  a  mere  passing  remark.  To  sustain  the  suit  as  now 
presented  would  be  in  affirmance  and  furtherance  of  an  unlawful 
and  void  contract.  It  is  in  no  sense  a  suit  in  disaffirmance.  Whether 
complainant  could  tender  back  the  shares  recovered,  and  maintain 
a  suit  to  recover  the  money  paid  for  the  shares  upon  an  implied 
agreement  to  return  money  which  the  defendant  had  no  right  to 
retain,  is  a  question  not  presented  upon  this  record." 

To  the  same  effect  is  Mayor  of  Norwich  v.  Norfolk  Ey.,  supra^ 


§  73.]  ACTIONS   ON   CONTRACTS.  Ill 

it  must  expect  and  should  receive  the  same  denunciation 
in  a  court  of  equity.  Courts  of  equity,  like  those  of  law, 
must  accept  contracts  as  they  are  made,  and  have  no 
power  to  make  contracts  for  parties.     If  the  contracts 

where  the  court  say:  "Where  a  corporation  has  beeu  created  for 
the  purpose  of  caiTjing  on  a  particular  trade,  or  making  a  rail- 
way from  one  place  to  another,  and  it  attempts  to  substitute  an- 
other trade,  or  to  make  the  railway  to  another  place,  the  objection 
is  to  its  entire  want  of  power  for  the  new  purpose;  its  life  and 
functions  are  the  creation  of  the  legislature,  and  they  do  not  exist 
for  any  other  than  the  specified  purpose;  for  any  other,  the  mem- 
bers are  merely  unincorporated  individuals.  ...  A  transgres- 
sion of  the  law  cannot  be  the  foundation  of  an  action.  The  cove- 
nant being  illegal,  the  covenanteee  can  as  little  maintain  an  action 
for  breach  of  it  as  he  can  file  a  bill  in  equity  for  a  specific  perform- 
ance of  it." 

In  Cincinnati  Co.  v.  Rosenthal,  55  111.  85,  the  court  say:  "When 
the  legislature  prohibits  an  act,  or  declares  that  it  shall  be  unlaw- 
ful to  perform  it,  every  rule  of  interpretation  must  say  that  the  leg- 
islature intended  to  interpose  its  power  to  prevent  the  act,  and,  as 
one  of  the  means  of  its  prevention,  that  the  courts  sliall  hold  it 
void.  This  is  as  manifest  as  if  the  statute  had  declared  that  it 
should  be  void.  To  hold  otherwise  would  give  the  person,  or  corpo- 
ration, or  individual,  the  same  rights  in  enforcing  prohibited  con- 
tracts as  the  good  citizen  who  respects  and  conforms  to  the  law. 
To  permit  such  a  contract  to  be  enforced,  if  not  offering  a  premium 
to  violate  a  law,  it  certainly  withdraws  a  large  portion  of  the  fear 
that  deters  men  from  defying  the  law.  To  do  so,  places  the  person 
who  violates  the  law  on  an  equal  footing  with  those  who  strictly 
observe  its  requirements." 

Van  Vlete,  V.  C,  in  National  Trust  Co.  v.  Miller,  6  Stew.  (N.  J.)  155, 
says:  "Nor  can  the  powers  of  a  corporation  be  in  the  slightest  de- 
gree enlarged  or  extended  by  the  assent  of  its  stockholders,  or  by 
any  action  they  may  take.  .  .  .  And  the  supreme  court  of  the 
United  States  has  recently  declared,  following  a  judgment  of  the 
House  of  Lords,  in  which  the  present  Loi'd  Chancellor  (Selborne) 
and  the  late  Lord  Chancellor  (Cairns)  and  Lords  Chelmsford,  Hath- 
erly  and  O'Hagan  concurred,  that  the  broad  doctrine  is  now  es- 
tablished that  a  contract  not  within  the  scope  of  the  powers  con- 
ferred on  a  corporation  cannot  be  made  valid  by  the  consent  of 
every  one  of  the  stockholders,  nor  can  it,  by  any  partial  perform- 
ance, become  the  foundation  of  any  right  of  action.     (Thomas  v. 


112  ACTIONS   ON   CONTRACTS.  [§  73. 

which  parties  attempt  to  make  are  void  because  in  defi- 
ance of  some  statute,  they  are  void  alike  in  either  court, 
and  neither  court  can  change  a  void  into  a  valid  contract.^ 
As  Mr.  Justice  Brewer,  in  Hedges  v.  Dixon  County^  sujpra^ 
said:  "This  court  can  make  no  contract  for  the  parties. 
It  must  take  the  contract  which  they  make.  That  con- 
tract was  one  which  the  county  was  not  authorized  to 

West  Jersey  R.  R,  Co.,  101  U.  S.  71.)  While  it  must  be  admitted  that 
this  doctrine  has  not  received  the  sanction  of  every  eminent  judge 
who  has  been  called  to  enforce  it,  yet  I  think  it  is  now  vouched  for 
by  such  august  authority,  and  is  so  manifestly  supported  by  sound 
reason  and  the  highest  considerations  of  policy,  that  it  must  here- 
after be  accepted  universally  as  expressing  the  true  rule  of  judg- 
ment in  such  cases." 

In  the  light  of  the  foregoing  decisions  and  extracts,  the  following 
suggestion  of  Mr.  Wood  in  his  work  on  Railroads  (ed.  1894,  p.  570) 
is  almost  nonsensical:  "It  has  never  been  contended  that  a  con- 
tract xdtra  vires  could  be  set  up  by  the  corporation  which  made  it, 
and  whose  want  of  power  is  the  ground  of  the  invalidity  of  the  con- 
tract. A  corporation  is  bound  to  know  the  extent  of  its  own  powers, 
and  if  it  makes  a  contract  in  excess  of  them  and  is  worsted  it  cannot 
be  held  to  complain.  It  is  the  other  contracting  party  that  is  pro- 
tected. .  .  .  The  doctrine  that  a  corporation  when  sued  upon  a 
contract  by  it  cannot  plead  the  defense  of  ultra  vires,  but  is  estopped, 
except  where  the  contract  is  void  as  opposed  to  public  policy  or  for 
other  reasons  —  that  is  to  say,  that  the  mere  fact  that  the  contract 
was  beyond  the  powers  of  the  corporation  renders  it  invalid  only  — 
has  been  long  recognized  and  acquiesced  in  by  courts  of  every  juris- 
diction."  This  is  almost  as  radical  a  position  (but  in  the  opposite 
direction)  as  that  taken  by  a  wise  justice  of  the  peace  at  Buffalo. 
It  is  reported  that  some  years  ago  a  farmer  sued  an  orphan  asylum 
at  that  place  for  injury  to  his  sheep  by  a  dog  kept  at  the  asylum. 
The  case  was  tried  in  the  justice's  court,  and  the  judge  held  as  fol- 
lows: "I  have  carefully  looked  over  the  defendant's  charter,  and  I 
find  it  is  not  authorized  to  keep  anything  but  orphans  —  keeping  a 
dog  was  therefore  ultra  vires,  and  it  is  not  liable  in  this  action." — 
Green  Bag. 

1  Hedges  v.  Dixon  County,  37  Fed.  Rep.  304;  In  re  Cork  &  Youghal 
Ry.,  4  Ch.  748;  S.  C,  9  Ex.  262. 


§  74.]  ACTIONS    ON   CONTKAOTS.  113 

make.  The  bonds  were  void  as  adjudged  in  a  court  of 
law,  void  in  whole  and  in  part,  and  they  must  be  so  ad- 
judged in  a  court  of  equity." 

§  T4.  Quantum  meruit  —  Belief  on  ultra  vires  contract. 

Though  courts  acting  under  proper  construction  of  the 
law  will  sustain  no  action  on  contracts  made  by  corpora- 
tions which  are  beyond  the  scope  of  their  powers,  and 
therefore  unlawful  and  void,  yet  relief  may  be  had  by 
the  party  aggrieved  by  disaffirming  the  contract  and 
suing  to  recover  as  on  a  quantum  meruit  the  value  of 
what  the  defendant  has  actually  received  the  benefit  of.^ 

1  Railway  Co.  v.  Keokuk  Bridge  Co.,  131  U.  S.  387;  Parkersburg  v. 
Brown,  106  U.  S.  487;  Central  Trans.  Co.  v.  Pullman  Car  Co.,  139  U.  S. 
24;  Chapman  v.  Douglas  Co.,  107  U.  S.  348;  Salt  Lake  City  v.  Hol- 
lister,  118  U.  S.  256;  Pennsylvania  R.  Co.  v.  St.  Louis,  etc.  Co.,  118 
U.  S.  290;  Mayor  v.  Ray,  19  Wall.  (U.  S.)  468;  Allegheny  City  v.  Mc- 
Clurkin,  14  Pa.  St.  81;  In  re  Cork,  etc.,  4  Ch.  Div.  748;  Atlas  Bank 
V.  Nahant  Bank,  4  Met.  (IMass.)  581;  Curtis  v.  Leavitt,  15  N.  Y.  297; 
Leavitt  v.  Palmer,  3  Comst.  (N.  Y.)  19;  Pratt  v.  Short,  79  N.  Y.  437; 
Norton  v.  Bank,  61  N.  H.  589;  Greenville  Compress  v.  Planters'  Press, 
70  Miss.  669;  Ohio  Life  Ins.  Co.  v.  Trust  Co.,  11  Humph.  (Tenn.)  1; 
Williams  v.  Bank,  71  Miss.  858;  Marble  Co.  v.  Harvey,  92  Tenn.  115; 
Powder  River  Live  Stock  Co.  v.  Lamb,  38  Neb.  353;  Eyser  v.  Weiss- 
gerber,  2  Iowa,  463;  Freher  v.  Geiseka,  5  Iowa,  472;  Formholz  v.  Tay- 
lor, 13  Iowa,  500;  Imhoff  v.  House,  36  Neb.  28;  Ossippee  Mfg.  Co.  v. 
Canney,  54  N.  H.  295;  White  v.  Franklin  Bank,  22  Pick.  (Mass.)  181; 
Howson  V.  Hancock,  8  T.  R.  577;  Utica  Ins.  Co.  v.  Scott,  19  John. 
(N.  Y.)  1;  Little  v.  O'Brien,  9  Mass.  423;  Rich  v.  Errol,  51  N.  H.  361; 
National  Bank  v.  Globe  Works,  101  Mass.  57;  Gas  Light  Co.  v.  United 
Gas  Co.,  85  Me.  541;  Twiss  v.  Life  Association,  87  Iowa,  733;  Day  v. 
Sfjiral  Spring  Co.,  57  Mich.  146;  Union  Hardware  Co.  v.  Plume  Co., 
58  Conn.  219;  Miller  v.  American  Ins.  Co.,  21  S.  W.  Rep.  39  (Tenn., 
1893);  Farmers'  L.  &  T.  Co.  v.  St.  Joseph  R.  Co.,  1  McCrary  (U.  S.),  247; 
Carey  v.  East  Saginaw,  79  Mich.  73;  Paul  v.  Kenosha,  22  Wis.  266; 
Hull  V.  Swansea,  5  Q.  B.  526;  Athenaeum,  etc.  Co.  v.  Pooley,  3  De  G. 
&  J.  294;  In  re  Phoenix  Co.,  2  J.  &  H.  441;  In  re  Sea  Foam,  etc.  Ins. 
Co.,  5  De  G.,  M.  &  G.  465;  Logan  Co.  Bank  v.  Townsend,  139  U.  S. 
67;  Northwestern  Pack.  Co.  v.  Shaw,  37  Wis.  655;  Oneida  Bank  v. 


114  ACTIONS    ON   CONTRACTS.  [§  74. 

As  was  said  by  the  court  in  Pratt  v.  Short,  supra:  "  It  is 
no  doubt  the  general  rule  that  no  right  of  action  can 
spring  out  of  an  illegal  contract.  And  the  rule  that  an 
illegal  contract  cannot  be  enforced  applies  as  well  to  con- 
tracts malum  prohihitum  as  to  contracts  malum  in  se. 
But  it  does  not  necessarily  follow  that  all  the  conse- 
quences attending  a  contract  which  is  contrary  to  public 
morals,  or  founded  on  an  immoral  consideration,  attend 
and  affect  a  contract  7nalum prohibitum  merely.  The  law 
in  the  former  case  will  not  undertake  to  relieve  parties 
from  the  position  in  which  they  have  placed  themselves, 
or  to  adjust  the  equities  between  them.  But  in  the  lat- 
ter case,  while  the  law  will  not  enforce  the  prohibited 
contract,  it  will  take  notice  of  the  circumstances,  and  if 
justice  and  equity  require  a  restoration  of  money  or  prop- 
erty secured  by  either  party  thereunder,  it  will,  and  in 
many  cases  has,  given  relief.  So  also  a  prohibitory  stat- 
ute may  itself  point  out  the  consequences  of  its  violation, 
and  if,  on  a  consideration  of  the  whole  statute,  it  appears 
that  the  legislature  intended  to  define  such  consequences, 
and  to  exclude  every  other  penalty  or  forfeiture  than 
such  as  is  declared  in  the  statute  itself,  no  other  will  be 
enforced,  and  if  an  action  can  be  maintained  on  the  trans- 
action of  which  the  prohibited  transaction  was  a  part 
without  sanctioning  the  illegality,  such  action  will  be  en- 
tertained." Accordingly,  in  Day  v.  Spiral  Spring  Co., 
supra,  plaintiff  contracted  to  sell  to  defendant  corpora- 
tion one  hundred  and  seventy -four  tons  of  excelsior,  not  to 
be  used  by  defendant  in  its  business,  but  to  be  resold  by 
it  on  speculation,  as  plaintiff  was  fully  advised.  After  de- 
Ontario  Bank,  21  N.  Y.  490;  Southern  Ins.  Co.  v.  Lanier,  5  Fla.  110; 
Hall  V.  Paris,  59  N.  H.  71;  Whitney  v.  Peay,  24  Ark.  22;  Roberts  v. 
Darning  Co.,  Ill  N.  C.  432;  Curtis  v.  Piedmont  Co.,  109  N.  C.  401; 
Maher  v.  Chicago,  38  111.  266;  Thomas  v.  Port  Huron,  27  Mich.  328. 


§  74.]  ACTIONS    ON    CONTEACTS.  115 

livering  a  considerable  quantity  plaintiff  refused  to  deliver 
more,  and  defendant  refused  to  pay  for  what  had  been 
delivered  unless  the  whole  amount  was  delivered  as  agreed ; 
whereupon  plaintiff  sued  for  the  value  of  the  excelsior 
delivered,  and  defendant  set  up  as  a  counter-claim  dam- 
ages resulting  from  a  failure  by  plaintiff  to  fully  perform 
the  contract.  It  was  held.  Chief  Justice  Cooley  deliver- 
ing the  opinion  of  the  court,  that  plaintiff  was  entitled  to 
recover  for  the  excelsior  actually  delivered,  although  the 
contract  was  ultra  vires,  and  that  defendant  was  not  en- 
titled to  recoup  the  damages  arising  from  the  breach 
thereof.  So  a  corporation  agreed  with  plaintiff  to  sell 
goods  of  their  manufacture  on  commission  at  a  price  to 
be  fixed  by  plaintiff,  and  to  account  for  all  sales.  The 
goods  were  received  and  sold  by  the  corporation  for  less 
than  the  price  fixed,  and  the  money  received  for  them  ac- 
counted for  to  the  plaintiff.  It  was  held,  on  suit  brought 
to  recover  the  balance,  that  the  corporation  could  not  set 
up  in  defense  that  the  undertaking  was  ultra  vires,  and 
that  plaintiffs  were  entitled  to  recover  the  balance  of  the 
price  agreed  on,  deducting  the  defendant's  commission 
on  the  same.^ 

1  Union  Hardware  Co.  v.  Plume,  etc.  Co.,  58  Conn.  269. 

In  Ohio  Life  Ins.  Co.  v.  Merchants'  Ins.  &  Trust  Co.,  11  Humph. 
(Tenn.)  1,  the  defendant,  a  corporation  created  under  tiae  laws  of  the 
state  of  Tennessee,  had  entered  into  a  contract  beyond  its  corporate 
powers,  and  had  received  benefits  therefrom.  Being  sued  in  equity, 
it  defended  upon  the  ground  that  it  had  no  power  to  make  the  con- 
tract. The  court  held  that  while  the  defendant  was  not  liable  on 
the  contract,  relief  should  be  afforded  to  the  complainant  outside  of 
it,  saying:  '-We  are  of  opinion,  therefore,  that  the  complainant  is 
not  repelled  by  reason  of  the  illegality  relied  upon  in  defense,  but  is 
entitled  to  relief,  and  that  in  granting  it  the  court  will  promote  both 
the  claims  of  private  justice  and  the  ends  of  public  policy.  It  is  to 
be  observed,  however,  that  the  relief  is  against  the  contract  and  not 
upon  the  contract;  for  we  have  seen  that,  in  the  nature  of  things,^ 


110  ACTIONS    ON   OONTKAOTS,  [§  75. 

§  75.  Jxelicf  on  contract  ultra  vires  and  under  statute 
of  frauds. —  It  will  bo  noticed  that  there  is  a  striking 
similarity  in  the  princi])lcs  controlling  relief  granted  on 
ultra  vires  contracts,  and  recovery  had  when  a  contract 

the  law  caitnut  enforce  an  illegal  contract,  although  the  parties  be 
not  in  X)ari  delicto.  But  it  is  consistout  with  itself  tliat  the  law 
shall  annul  such  contracts,  and  jjlace  the  parties  in  all  respects  in 
statu  quo." 

So  in  Gas  Light  Co.  v.  United  Gas  Co.,  8.1  Me.  541,  the  court  say: 
"But  it  is  claimed  that,  iuasnuich  as  the  defendant  company  took 
and  held  possession  of  tlie  plaintilf  company's  works  by  virtue  of 
the  lease,  ultra  vires  is  no  defense  to  an  action  to  recover  tlie  agreed 
rent.  We  do  not  doubt  that  the  plaintiff  company  is  entitled  to 
recover  a  reasonable  rent  for  the  time  the  defendant  company  act- 
ually occupied  the  works;  but  do  not  think  tlie  amount  can  he  meas- 
ured by  the  tdtra  vires  agreement.  We  think  that  in  such  a  case 
the  recovery  must  be  had  upon  an  implied  agreement  to  pay  a  reason- 
able rent;  and  that  while  the  tdtra  vires  agreement  may  be  used  in 
evidence  in  the  nature  of  an  admission  of  what  is  a  reasonable  rent, 
it  cannot  be  allowed  to  govern  or  control  the  amount.  It  seems  to 
us  tliat  it  would  be  absurd  to  hold  tlidt  the  idtra  vires  lease  is  void  and 
at  the  same  time  hold  that  it  governs  the  rights  of  the  parties  with 
respect  of  the  amount  of  rent  to  be  recovered.  A  void  instrument 
governs  nothing.  We  think  the  correct  rule  is  the  one  stated  by 
Mr.  Justice  Gray  in  a  recent  case  in  the  United  States  supreme 
court.  He  said  that  a  contract  made  by  a  corporation  which  is  un- 
lawful and  void  because  beyond  the  scope  of  its  corporate  powers 
does  not,  by  being  carried  into  execution,  become  lawful  and  valid; 
and  that  the  proper  remedy  of  the  aggrieved  party  is  to  disaffirm 
the  contract  and  sue  to  recover  as  on  a  quantum  meruit  the  value 
of  what  the  defendant  has  actually  received  the  benefit  of.  Pitts- 
burgh, etc.  Co.  V.  Keokuk,  etc.  Co.,  131  U.  S.  871.  We  think  this  is 
the  correct  rule." 

Another  leading  case,  which  might  be  noticed  in  this  connection, 
is  that  of  ]\Iiller  v.  Tnsunince  Co.,  21  S.  W.  Rep.  39,  where  this  branch 
of  the  subject  is  pretty  tlioroughly  discussed.  The  court  there  said: 
"  We  recognize  a  diversity  of  opinion  in  the  courts  of  America  as  to 
the  right  of  either  party  to  rely  upon  the  defense  of  ultra  vires, 
when  the  contract  is  not  expressly  prohibited,  and  is  not  immoral, 
and  has  been  fully  executed  upon  ova  side.  The  theory  upon  which 
the  civses  rest  which  hold  that  the  defense  is  not  to  be  entertained 


§  75.]  ACTIONS   ON   CONTRACTS.  117 

is  void  under  the  statute  of  frauds.  Thus,  where  a  con- 
tract for  the  sale  of  personal  jDroperty  is  void  under  the 
statute  of  frauds,  and  there  has  been  a  delivery  of  the 
thing  sold  to  the  purchaser  and  an  acceptance  thereof  by 

when  the  act  is  one  merely  in  excess  of  express  authority  seems  to 
be  that  such  a  contract  should  be  regarded  as  a  mere  breach  of  duty 
by  the  agents  of  the  corporation,  and  that  the  state  has  ample  rem- 
edy for  such  abuse,  or  for  a  usurpation  of  power,  in  a  pi'oceeding  to 
annul  the  charter;  that  to  permit  such  a  defense  is  of  no  service  to 
the  state  in  preventing  corpoi'ate  usurpation  or  in  promoting  the 
public  interests,  and  only  operates  to  encourage  dishonesty  and 
promote  injustice.  Resting  upon  one  or  more  of  these  arguments 
many  cases  might  be  cited.  There  are,  then,  a  class  of  cases,  which 
make  a  distinction  between  acts  merely  in  excess  of  authority  and 
those  which,  in  addition,  are  affirmatively  forbidden,  or  immoral,  or 
in  contravention  of  some  principle  of  public  policy.  It  seems  to  us 
that  the  true  foundation  of  the  doctrine  of  ultra  vires  lies  in  the 
proposition  that  every  act  of  a  corporation  in  excess  of  its  poioers  is 
an  act  in  contravention  of  public  policy,  and,  for  that  reason,  to  be 
held  null  and  void.  The  ground  upon  which  corporate  privileges 
are  conferred  is  that  the  public  interests  may  be  thereby  subserved. 
If  this  is  not  so,  then  all  such  concessions  are  mere  acts  of  legisla- 
tive favoritism,  and  contravene  the  foundation  upon  which  gov- 
ernment is  supposed  to  rest, —  that  all  are  to  be  protected  in  the 
enjoyment  of  equal  rights  and  privileges.  Charters  must  be  sup- 
posed to  be,  therefore,  granted  upon  the  supposition  that  some  pub- 
lic interest  is  thereby  advanced.  'The  legislature  is  therefore 
presumed,'  says  Judge  Selden  in  Bissell  v.  Railroad  Co.,  22  N.  Y.  285, 
'to  have  granted  just  so  much  power,  and  so  many  peculiar  priv- 
ileges, as  those  interests  are  supposed  to  require.'  It  must  be,  there- 
fore, that  any  act  in  excess  of  these  granted  powers  is  an  act  con- 
trary to  public  policy,  and,  upon  that  ground,  illegal  and  void.  Any 
other  view  by  which  such  acts  are  to  be  supported  because  executed 
would  operate  as  an  enormous  practical  extension  of  the  power  of 
corporations.  The  view  this  court  has  taken  has  therefore  been 
that  '  all  acts  outside  the  objects  of  its  creation,  as  defined  in  the 
law  of  organization,  and  therefore  beyond  the  powers  conferred 
upon  it,'  are  acts  not  voidable  only  but  wholly  void.  Marble  Co.  v. 
Harvey,  92  Tenn.  115;  Elevator  Co.  v.  Memphis  &  C.  R.  Co.,  85  Tenn. 
705;  Mallory  v.  Oil  Works,  86  Tenn.  598.  The  rule  and  the  founda- 
tion upon  which  it  rests,  as  held  by  the  English  courts,  are  identical 


118  ACTIONS   ON   CONTKACTS.  [§  75. 

him,  the  plaintiff  may  recover  the  reasonable  value  of  the 
property,  if  his  petition  is  so  framed ;  but  a  party  cannot 
recover  on  a  quantum  meruit  where  he  pleads  and  relies 
solely  upon  a  special  contract.^ 

with  our  own.  .  .  .  The  Tennessee  rule  is  in  accord  with  the 
holding  of  many  of  the  American  courts.  Pittsburg,  etc.  R.  Co.  v. 
Keokuk  &  Hamilton  Bridge  Co.,  131  U.  S.  389;  Central  Trans.  Co. 
V.  Pullman's  Car  Co.,  139  U.  S.  60;  Davis  v.  Railroad  Co.,  131  Mass. 
258;  Chambers  v.  Falkner,  65  Ala.  448;  Bank  v.  Dunkin,  54  Ala.  471. 
The  remedy  in  case  one  of  the  parties  has  received  a  benefit  under 
such  a  contract,  which  ex  aequo  et  bono,  it  ought  not  to  retain,  is  a 
suit  in  disaflSrmance  and  for  an  accounting.  Marble  Co.  v.  Harvey, 
supra.  The  plaintiff'^  suit  is  upon  the  contract,  and  in  affirmance 
of  it,  and,  if  there  be  nothing  else  in  the  case,  could  not  be  main- 
tained." 

1  Powder  River  Live  Stock  Co.  v.  Lamb,  38  Neb.  358;  Eyser  v. 
Weissgerber,  2  Iowa,  463;  Freher  v.  Geiseka,  5  Iowa,  472;  Formholz 
V.  Taylor,  18  id.  500;  Imhoff  v.  House,  36  Neb.  28;  Rich  v.  Errol,  51 
N.  H.  361;  Little  v.  O'Brien,  9  Mass.  423;  White  v.  Franklin  Bank,  23 
Pick.  (Mass.)  181;  Howson  v.  Hancock,  8  T.  R.  577;  Robinson  v. 
Bland,  2  Burr.  1077;  Utica  Ins.  Co.  v.  Scott,  19  Johns.  (N.  Y.)  1;  Same 
V.  Cadwell,  8  Wend.  (N.  Y.)  296;  Same  v.  Bloodgood,  4  Wend.  (N.  Y.) 
652;  Ossipee  Mfg.  Co.  v.  Canney,  54  N.  H.  295, 


CHAPTER  YI. 

ADOPTION  AND  RATIFICATION  OF  CONTRACTS. 

§  76.  General  doctrine  of  ratification  stated. 

77.  Nature  and  effect  of  ratification. 

78.  Ultra  vires  contracts  of  corporations  cannot  be  ratified. 

79.  Ratification  by  corporation  of  acts  of  promoters. 

§  76.  General  doctrine  of  ratification  stated. —  It  is  the 
general  rule  that  when  a  contract  is  made  or  an  act  per- 
formed by  any  officer  or  agent  of  a  corporation  in  its  be- 
half and  for  a  purpose  authorized  by  its  charter,  and  the 
corporation  receives  the  benefit  of  the  act  or  contract 
without  objection,  it  may  be  presumed  to  have  authorized 
and  adopted  or  ratified  the  act  of  such  agent.^  In  such 
case  the  maxim  omnis  ratihahitio  retro  trahitur  et  mandato 
jpriori  cBquvparatur  applies.  This  proposition  is  but  an 
application  of  the  doctrine  of  the  law  of  agency,  that 
when  a  person  ratifies  the  unauthorized  act  of  another 
who  has  purported  to  act  on  his  behalf,  the  legal  effect 
of  the  act  will  be  the  same  as  if  it  had  been  authorized 
before  it  was  done.  The  ratification,  to  be  binding  on  a 
corporation,  however,  must  be  the  act  or  acquiescence  of 
some  corporate  agency  which  itself  would  have  the  power 
to  do  or  authorize  the  act  committed ;  for  a  ratification 
cannot  arise  from  the  action  either  of  the  officers  who  did 

1  Pittsburg,  etc.  R.  Co.  v.  Keokuk,  etc.  Bridge  Co.,  131  U.  S.  371; 
Pneumatic  Gas  Co.  v.  Berry,  113  U.  S.  322;  Gold  Mining  Co.  v.  Na- 
tional Bank,  96  U.  S.  640;  Zabrieskie  v.  Cleveland,  etc.  R.  Co.,  23 
How.  (U.  S.)  381;  Bank  of  U.  S.  v.  Dandridge,  13  Wheat.  (U.  S.)  64; 
Bank  of  Columbia  v.  Patterson,  7  Cranch  (U.  S.),  379. 


120  ADOPTION   AND    KATIFIOATION   OF   CONTRACTS.        [§  77. 

the  unauthorized  acts  or  of  those  who  would  have  had  na 
authority  to  do  them.^ 

§  77.  Nature  and  effect  of  ratification. —  The  general 
nature  and  effect  of  ratification  is  stated  by  Mr.  Justice 
Field  as  follows:  " The  general  rule  as  to  the  effect  of  a 
ratification  by  one  of  the  unauthorized  act  of  another  re- 
specting the  property  of  the  former  is  well  settled.  The 
ratification  operates  upon  the  act  ratified  precisely  as 
though  authority  to  do  the  act  had  been  previously  given, 
except  where  the  rights  of  third  parties  have  intervened 
between  the  act  and  the  ratification.  In  other  words,  it 
is  essential  that  the  party  ratifying  should  be  able  not 
merely  to  do  the  act  ratified  at  the  time  the  act  was  done, 
but  also  at  the  time  the  ratification  was  made."  ^  Al- 
though this  reasoning  was  adduced  in  discussing  the  law 
of  agency,  yet  the  same  principle  is  involved  in  applying 
the  doctrine  of  ratification  by  corporations  to  unauthor- 
ized acts  of  their  officers  or  ao:ents,  such  ratification  being: 
equivalent  to  antecedent  authority.'  Accordingly,  if  a 
person  assuming  to  act  as  agent  of  a  corporation,  but 
without  legal  authority,  or  an  agent  in  excess  of  his 
proper  authority,  make  a  contract,  and  the  corporation 
knowingly  receive  and  retain  the  benefit  of  it,  this  will 
be  ratification  of  the  contract,  and  render  the  corporation 
liable  as  a  party  to  it;  provided,  of  course,  such  contract 
be  within  the  scope  of  the  corporate  powers.* 

1  Taylor,  Priv.  Corp.,  §  211;  Tracy  v.  Guthrie  County  Agl.  Soc,  47 
Iowa,  127;  Crunis'  Appeal,  66  Pa.  St.  474;  Beach  on  Priv.  Corp.,  §  196. 

2  Cook  V.  TuUis,  18  Wall.  332. 

3  Taylor,  Priv.  Corp.,  §  211;  First  National  Bank  v.  Fricke,  75  Mo. 
178;  Planters'  Bank  v.  Sharp,  12  Miss.  75;  Fleckner  v.  Bank  of  United 
States,  8  Wheat.  338,  363. 

4  Bank  of  Kentucky  v.  Schuylkill  Bank,  1  Par.  Sel.  Cas.  (N.  Y.) 
180;  Merchants'  Bank  v.  Central  Bank,  1  Ga.  418;  Proprietors,  etc. 


§  78.]        ADOPTION    AXD   EATIFICATIOISr   OF   CONTRACTS.  121 

§  78,  Ultra  vires  contracts  of  corjjoration  cannot  he 
ratified. —  The  foregoing  rule  must  not  be  confounded, 
however,  with  the  well-settled  doctrine  that  a  corpora- 
tion cannot  ratify  an  act  or  contract  beyond  the  scope  of 
its  chartered  powers ;  for  it  is  a  well-established  principle 
in  the  law  of  corporations  that  an  act  or  contract  ultra 
vires  a  corporation  is  void,  and  cannot  be  made  valid  by 

V.  Gordon,  1  Pick.  (Mass.)  297;  Randall  v.  Van  Vechten,  19  John. 
(N.  Y.)  60;  Moss  v.  Rossie  Lead  Min.  Co.,  5  Hill  (N.  Y.),  137;  Episcopal 
Soc.  V.  Episcopal  Church,  1  Pick.  (Mass.)  373;  Haj-wood  v.  Pilgrim 
Soc,  21  Pick.  (Mass.)  270;  Ohio,  etc.  R.  Co.  v.  Middleton,  20  111.  629; 
Corn  ExcIl  Bank  v.  Cumberland  Coal  Co.,  1  Bosw.  (N.  Y.)  436;  Key- 
ser  V.  School  Dist.,  35  N.  H.  477;  McCullough  v.  Talladega  Ins.  Co., 
46  Ala.  376;  Durar  v.  Hudson  County  Ins.  Co.,  22  N.  J.  L.  171;  Hooker 
V.  Eagle  Bank,  30  N.  Y.  83;  Whiting  v.  Union  Trust  Co.,  65  N.  Y. 
576;  Conant  v.  Canal  Co.,  29  Vt.  263;  Shaver  v.  Bear  River  Min.  Co., 
10  Cal.  396;  Dispatch  Line  v.  Bellamy  Man.  Co.,  12  N.  H.  205;  Bank 
of  Lyons  v.  Demon,  Lalor,  398;  Germantown  Ins.  Co.  v.  Dhein,  43 
Wis.  420;  State  v.  Smith,  48  Vt.  266;  Stark  Bank  v.  United  States 
Pottery  Co.,  34  Vt.  144;  Whit  well  v.  Warner,  20  Vt.  424;  Aurora  Agl. 
Soc.  V.  Paddock,  80  111.  263;  Ottowa  R.  Co.  v.  Murray,  15  111.  336; 
Houghton  V.  Dodge,  5  Bosw.  (N.  Y.)  326;  Farmers',  etc.  Bank  v.  Sher- 
man, 6  Bosw.  (N.  Y.)  181;  Woodbridge  v.  Addison,  6  Vt.  204;  Bank 
of  Columbia  v.  Patterson's Adm'rs,  7  Cranch  (U.  S.),  299;  Peterson  v. 
New  York,  17  N.Y.  449;  Davidson  v.  Bridgeport,  8  Conn.  472;  Church 
v.  Sterling,  16  Conn.  389;  Medomak  Bank  v.  Curtis,  24  Me.  36;  Emmet 
V.  Reed,  8  N.Y.  312;  Alexander  v.  Brown,  9  Hun  (N.  Y),  641;  City 
Bank  v.  Baltimore,  7  Har.  &  J.  (Md.)  104;  Weeden  v.  Mad  River  R. 
Co.,  14  Ohio,  563;  Perry  v.  Waterproof  Co.,  37  Conn.  520;  Union  Gold 
Min.  Co.  v.  Rocky  Mountain  Nat.  Bank,  1  Colo.  531;  s.  C,  2  Colo.  248; 
S.  C,  96  U.  S.  640;  Rich  v.  State  Nat.  Bank,  7  Neb.  201 ;  Peninsular  Bank 
V.  Hanmer,  14  Mich.  208:  Humphrey  v.  Patrons'  Merc.  Ass'n,  50  Iowa, 
607;  Fishkill  Sav.  Inst.  v.  Bostwick,  19  Hun  (N.  Y),  354;  International, 
etc.  Co.  V.  United  States,  13  Ct.  of  CI.  209;  Delaware  Canal  Co.  v. 
Pennsylvania  Coal  Co.,  21  Pa.  St.  131 ;  Ridley  v.  Plymouth  Grinding 
Co.,  2  Exch.  711;  Stuart  v.  London,  etc.  R.  Co.,  15  Beav.  513;  Smith 
v.  Hull  Gas  Co.,  11  C.  B.  897;  Ex  parte  Scholbred,  28  Week.  Rep.  339; 
Troup's  Case,  29  Beav.  353;  Edwards  v.  Grand  June.  R.  Co.,  1  Myl.  & 
Cr.  650;  Preston  v.  Railroad  Co.,  1  Sim.  (N.  S.)  586;  S.  C,  7  Eng.  L.  & 
Eq.  124. 


122  ADOPTION   AND   EATIFICATION   OF   CONTRACTS.        [§  TS. 

any  subsequent  act  of  the  corporation  purporting  to 
ratify  the  same,  because  there  is  no  residuary  power  to 
confirm  it.  "What  they  could  not  make  they  cannot  ratify. 
'Nor  can  a  void  act  or  contract  become  valid,  merely  be- 
cause it  remains  unquestioned.  A  ratification  is  in  law 
treated  as  equivalent  to  a  previous  authority,  and  it  fol- 
lows that,  as  a  general  rule,  a  person  or  body  of  persons, 
or  a  corporation,  not  competent  to  authorize  an  act,  can- 
not give  it  validity  by  ratifying  it.^  This  rule  is  stated 
by  a  learned  author  thus :  "  An  act  which  is  in  excess  of 
the  charter  of  a  corporation  involves  an  unauthorized  ex- 
ercise of  corporate  power  on  the  part  of  the  company ; 
and  this  objection  cannot  be  obviated  by  any  subsequent 
ratification,  either  by  the  agents  or  by  the  shareholders 
of  the  corporation.  So  it  is  clear  that,  if  an  act  per- 
formed by  an  agent  on  behalf  of  a  corporation  is  prohib- 
ited by  statute  or  by  the  charter  of  the  company,  or  by 
some  o^eneral  rule  of  the  common  law,  no  ratification  by 
either  agents  or  the  shareholders  of  the  corporation  can 
cure  the  illegality  of  the  act.  Ratification  of  an  act  has 
no  greater  effect  than  a  previous  grant  of  authority  to  do 
the  act ;  it  merely  obviates  the  objection  that  the  princi- 
pal did  not  authorize  the  act  to  be  done."  ^ 

1  Tippecanoe  Co.  v.  Lafayette,  etc.  R.  Co.,  50  Ind.  86, 112;  Irvine  v. 
Union  Bank,  2  App.  Cas.  366;  Dimpfel  v.  Ohio  Ry.  Co.,  110  U.  S.  209; 
Green's  Brice's  Ultra  Vires,  cb.  VI;  Dillon,  Munic.  Corp.,  §§  385,  386 
(3d  ed.);  Christian  University  v.  Jordon,  29  Mo.  68;  Ang.  &  Ames, 
§  304;  McCullough  v.  Moss,  5  Denio  (N.  Y.),  567;  Ashbury  Ry.  Co.  v. 
Riche,  7  H.  L.  653,  673;  S.  C.  (below),  9  Exch.  224,  262;  Bird  v.  Bird's 
Patent  Co.,  9  Ch.  358;  National  Trust  Co.  v.  Miller,  33  N.  J.  Eq.  155; 
Thomas  v.  Railway  Co.,  101  U.  S.  73;  Oregon  Ry.  v.  Oregonian  Ry., 
130  U.  S.  22;  Central  Transp.  Co.  v.  Pullman's  Car  Co.,  139  U.  S.  24. 

liMor.  Priv.  Corp.,  §619. 

In  Ashbury  Ry.  Co.  v.  Riche,  supra,  the  Lord  Chancellor  said: 
"  Now,  I  am  clearly  of  opinion  that  this  contract  was  entirely,  as  I 
have  said,  beyond  the  objects  of  the  memorandum  of  association. 


§  79.]       ADOPTION   AND   RATIFICATION   OF   CONTRACTS.  123 

§  79.  Satification  hj  corporation  of  acts  of  j^romoters. 
The  promoters,  or  individuals  organizing  a  corporation, 
are  not,  of  course,  the  corporation.  The  legal  body,  as 
has  been  shown,  is  distinct  from  the  individuals  compos- 
ing it.  The  statutes  confer  no  authority  upon  the  pro- 
moters of  a  corporation,  as  a  general  rule,  to  enter  into 
preliminary  contracts  binding  the  corporation  when  it 
shall  come  into  existence.  Such  contracts  may,  however, 
bind  the  individuals  who  make  them.  If  ratified  and 
adopted  by  the  corporation,  and  they  are  within  the  cor- 

If  so,  it  was  thereby  placed  beyond  the  powers  of  the  company  to 
make  the  contract.  If  so,  my  lords,  it  is  not  a  question  whether 
the  contract  ever  was  ratified  or  was  not  ratified.  If  it  was  a  con- 
tract void  at  its  beginning,  it  was  void  because  the  company  could 
not  make  the  contract.  If  every  shareholder  of  the  company  had 
said:  'That  is  the  contract  which  we  desire  to  make,  to  which  we 
sanction  the  placing  the  seal  of  the  company,'  the  case  would  not 
have  stood  in  any  different  position  from  that  in  which  it  stands 
now.  The  shareholders  would  thereby,  by  unanimous  consent,  have 
attempted  to  do  the  very  thing  which,  by  the  act  of  parliament, 
they  were  prohibited  from  doing.  But,  my  lords,  if  the  sharehold- 
ers of  the  company  could  not  ab  ante  have  authorized  a  contract  of 
this  kind  to  be  made,  how  could  they  subsequently  sanction  the 
contract  after  it  had,  in  point  of  fact,  been  made?  I  endeavored  to 
follow,  as  accurately  as  I  could,  the  very  able  argument  of  Mr.  Ben- 
jamin at  your  lordships'  bar,  on  this  point;  but  it  appeared  to  me 
that  this  was  a  difficulty  with  which  he  was  entirely  unable  to 
grapple.  He  endeavored  to  contend  that  when  the  shareholders  had 
found  that  something  had  been  done  by  the  directors  which  ought 
not  to  have  been  done  they  might  be  authorized  to  make  the  best 
they  could  of  a  difficulty  into  which  they  had  thus  been  thrown, 
and  therefore  might  be  deemed  to  possess  power  to  sanction  the 
contract  being  proceeded  with.  My  lords,  I  am  unable  to  adopt 
that  suggestion.  It  appears  to  me  that  it  would  be  perfectly  fatal 
to  the  whole  scheme  of  legislation  to  which  I  have  referred  if  you 
were  to  hold  that,  in  the  first  place,  directors  might  do  that  which 
even  the  whole  company  could  not  do,  and  that  then,  the  sharehold- 
ers finding  out  what  had  been  done,  could  sanction,  subsequently, 
what  they  could  not  antecedently  have  authorized." 


124:  ADOPTION   AND   EATIFICATION   OF   CONTEAOTS.        [§  Y9. 

porate  powers,  and  are  not  otherwise  subject  to  objection, 
they  may  become  the  contracts  of  the  corporation  and 
enforceable  as  such.^  In  respect  of  contracts  of  promot- 
ers. Judge  Redfield  says :  "  The  promoters  are  in  no 
sense  identical  with  the  corporation,  nor  do  they  repre- 
sent it  in  any  relation  of  agency,  and  their  contracts 
could,  of  course,  only  bind  the  company  so  far  as  they 
should  be  subsequently  adopted  by  it,  as  their  successors."  ^ 
Such  a  contract  must  derive  its  vitality  from  the  meeting 
of  minds  when  both  parties  are  in  existence ;  until  then, 
it  can  be  nothing  more  than  an  offer  by  one  party.'    And 

iMunson  v.  Railroad  Co.,  103  N.  Y.  58;  Rockford  R.  Co.  v.  Sage, 
65  111.  328;  Safety  Dep.  Life  Co.  v.  Smith,  id.  309;  Western  Screw 
Co.  V.  Cousley,  73  111.  531;  Franklin  Ins.  Co.  v.  Hart,  31  Md.  59;  N.  Y. 
R.  Co.  V.  Ketchum,  27  Conn.  170;  Marchand  v.  Loan  Co.,  26  La.  Ann. 
389;  Frost  v.  Belmont,  6  Allen  (Mass.),  152;  White  v.  Manufacturing 
Co.,  1  Pick.  (Mass.)  215;  Earl  of  Shrewsbury  v.  North  Staf.  Ry.  Co., 
1  Eq.  593;  Bell's  Gap  Ry.  Co.  v.  Christy,  79  Pa.  St.  54;  Frankfort  Co. 
V.  Churchill,  6  T.  B.  Mon.  (Ky.)  427;  Caledonian  Ry.  Co.  v.  Helens- 
burgh, 3  Macq.  391;  Payne  v.  New  South  Wales  Coal  Co.,  10  Ex.  283; 
Pennsylvania  Match  Co.  v.  Hapgood,  141  Mass.  145;  Touche  v.  Ware- 
housing Co.,  6  Ch.  App.  071 ;  Spiller  v.  Paris  Rink  Co.,  7  Ch.  Div.  368; 
Whitney  v.  Wyman,  101  U.  S.  393;  McDonough  v.  Bank,  34  Tex.  309; 
Morrison  v.  Gold  Mountain  Co.,  52  Cal.  307. 

2  1  Redf.  on  Rys.,  §  9. 

In  Bell's  Gap  Railroad  Co.  v.  Christy,  supra,  an  action  was  brought 
against  a  railroad  company  to  recover  the  value  of  services  per- 
formed before  the  incorporation,  in  procuring  the  charter,  making 
surveys,  etc.  It  was  held  tliat  the  plaintiff  could  not  recover  in  the 
absence  of  proof  that  a  majority  of  the  incorporators  or  promoters 
of  the  coi'poration  authorized  the  service. 

In  Morrison  v.  Gold  Mountain  Co.,  supra,  an  agreement  was  made 
among  parties  owning  a  mine,  and  who  expected  to  incorporate 
themselves  but  did  not  then  do  so,  that  a  person  was  entitled  to  two 
thousand  five  hundred  shares  of  the  stock  of  the  company.  It  was 
held  not  to  be  the  agreement  of  the  corporation;  that  the  mere  ac- 
ceptance of  the  benefit  of  a  contract  does  not  imply  a  promise  on 
the  part  of  the  company  to  adopt  and  perform  it. 

3  Pennsylvania  Match  Co.  v.  Hapgood,  141  Mass.  145. 


§  79.]       ADOPTION    AND   RATIFICATION    OF   CONTRACTS.  125 

a  contract  made  by  the  promoters,  to  become  binding  on 
the  corporation,  should  bo  adopted  in  the  same  way  that 
its  own  contracts  are  made.  Formal  action  by  the  board 
of  directors  is  necessary  in  the  former  case  only  if  it 
would  be  so  in  the  latter.^ 

As  contracts  of  promoters  are  peculiarly  adapted  to 
companies  formed  under  the  acts  of  parliament  and  the 
Companies  Act  of  England,  the  subject  is  not  deemed  of 
sufficient  importance  in  this  country  to  require  further 
consideration  here. 

1  Batelle  v.  Northwestern  Cement  Co.,  37  Minn.  89. 


CHAPTEU  YII. 

THE    DOCTRINE    APPLIED    TO    INCIDENTAL  POWERS   OF 
CORPORATIONS. 
§  80.  Introductory. 

81.  Power  to  acquire  real  property. 

82.  Devises  to  corporations. 

83.  Jus  disponendi  in  corporations. 

84.  Power  to  sell  implies  power  to  mortgage. 

85.  Power  of  bank  to  bold  real  estate. 

86.  Power  to  acquire  by  eminent  domain. 

87.  Alienation  by  deed. 

88.  Conveyances  by  agent. 

89.  Acknowledgment  to  corporate  deeds. 

90.  Affixing  seal  to  deeds. 

91.  Assignment  for  benefit  of  creditors. 

92.  Power  to  act  as  trustee. 

93.  Trust  must  be  within  scope  of  corporate  purposes. 

94.  Cannot  be  compelled  to  execute  repugnant  trust. 

95.  Power  to  take  by  bequest. 

96.  Power  to  borrow  money. 

97.  Test  to  determine  if  transaction  is  borrowing. 

98.  Instances  of  implied  power  to  borrow. 

99.  Power  to  loan  money. 

100.  Power  as  to  negotiable  notes. 

101.  Power  as  indorsee. 

102.  Power  of  savings  bank  to  make  negotiable  paper. 

103.  Power  as  to  discount  and  purchase. 

104.  Liability  on  accommodation  paper. 

105.  Power  to  pledge  securities. 

§  80.  Introductory. —  In  addition  to  the  powers  usually 
granted  to  a  corporation  by  its  charter  or  the  laws  under 
which  it  is  organized  and  created,  there  are  certain  other 
powers,  which  a  long  line  of  adjudications  have  estab- 
lished, that  are  now  generall}'  regarded  as  incidental  to 


§  81.]  INCIDENTAL   POWEKS    OF   COEPORATIONS.  127 

those  specially  conferred ;  and  it  has  usually  been  in  the 
application  of  the  doctrine  of  ultra  vires  to  these  inci- 
dental powers  that  so  much  conflict  in  judicial  opinion 
has  occurred.  In  the  succeeding  sections  of  this  chapter 
will  be  set  forth  such  powers  as  have  been  declared  by 
the  great  weight  of  authority  as  incidental  to  those  spe- 
cially enumerated. 

§  81.  Power  to  acquire  real  property. —  At  common 
law,  unless  in  a  case  where  a  corporation  purchases  and 
undertakes  to  hold  real  property  for  purposes  wholly  out- 
side and  foreign  to  the  objects  of  its  creation,  or  unless 
restricted  by  its  charter  or  by  statute,  a  corporation 
generally  had  the  legal  capacity  to  take  title  in  fee  to 
real  property.^  And  even  under  modern  statutes,  if  the 
objects  for  which  the  corporation  is  formed  cannot  be 
accomplished  without  acquiring  and  holding  title  to  real 
estate,  then  such  power  may  be  implied.^  In  modern 
times,  however,  and  more  especially  in  this  country,  the 

11  Bl.  Com,  478;  2  Kent,  Corn.  281;  1  Wash.  Real  Prop.  (4th  ed.)  75; 
Beach,  Priv.  Corp.,  §  377;  Boone,  Corp.,  §  40;  Natoma,  etc.  Co.  v. 
Clarkin,  14  Cal.  544;  Hayward  v.  Davidson,  41  Ind.  212;  Lathrop  v. 
Commercial  Bank,  8  Dana  (Ky.),  114:  Inhabitants  of  Sutton  Parish 
V.  Cole,  3  Pick.  (Mass.)  232;  Thompson  v.  Waters,  25  Mich.  214;  Cal- 
loway M.  Co.  V.  Clark,  32  Mo.  305;  McCartee  v.  Orphan  Asylum,  9 
Cow.  (N.  Y.)  437;  Cham  plain  R.  Co.  v.  Valentine,  19  Barb.  (N.  Y.) 
484;  Robie  v.  Sedgwick,  35  Barb.  (N.  Y.)  319;  Reynolds  v.  Stark  Co., 
5  Ohio,  204;  Leazure  v.  Hillegas,  7  Sorg.  &  Rawle  (Pa.),  313;  The 
Banks  v.  Poitiaux,  3  Rand.  (Va.)  136;  Revanna  Nav.  Co.  v.  Dawson, 
3  Grat.  (Va.)  19;  Page  v.  Heineberg,  40  Vt.  81;  Auerbach  v.  Le  Sueur 
Mill.  Co.,  28  Minn.  291;  Ossipee,  etc.  Co.  v.  Canney,  54  N.  H.  295; 
Ashville  Division,  etc.  v.  Aston,  92  N.  C.  578;  State  v.  Madison,  7 
Wis.  688;  Blanchard's  Factory  v.  Warner,  1  Blatch.  (U.  S.)  258;  Dry 
Dock  Co.  V.  Hicks,  3  McL.  115. 

2  Crawford  v.  Longstreet,  43  N.  J.  L.  326;  State  v.  Mansfield,  28 
N.  J.  L.  510;  State  v.  Newark,  1  Dutch.  (N.  J.)  315;  2  Kent,  Com.  282; 
Blackburn  v.  Selma,  etc.  R.  Co.,  2  Flip.  (U.  S.)  525. 


128  INCIDENTAL   POWERS    OF   CORPORATIONS.  [§81- 

legislature  generally  }3rescribes  some  limits  to  the  powers 
of  corporations  to  purchase  and  hold  real  property,  the 
charter  and  law  under  which  it  is  organized  and  created 
being  the  source  to  which  we  must  go  to  ascertain 
whether  a  corporation  possesses  such  power,^  But  cor- 
porations created  for  a  specific  object  have  no  power  to 
take  and  hold  real  estate  for  purposes  wholly  foreign  to 
that  object.^  So  where  the  charter  of  a  corporation  pre- 
scribed that  "  the  lands,  tenements  and  hereditaments 
which  it  shall  be  law^f ul  for  the  said  corporation  to  hold 
shall  be  only  such  as  shall  be  required  for  its  accommo- 
dation in  relation  to  the  convenient  transacting  of  its 
business,  or  such  as  shall  have  been  honafide  mortgaged 
to  it  by  way  of  security,  or  conveyed  to  it  in  satisfaction 
of  debts  previously  contracted  in  the  course  of  its  deal- 
ings, or  purchased  at  sales  upon  judgments  which  shall 
have  been  obtained  for  such  debts,"  it  was  held  that  the 
corporation  was  prohibited  from  buying  or  selling  or  be- 
coming a  speculator  in  real  estate.^  But  it  has  been  held 
in  many  cases  that  where  a  corporation  has  purchased  or 
is  holding  more  land  than  it  is  authorized  to  acquire  or 
hold,  it  still  has  the  right  to  hold  it  against  all  others  ex- 
cept the  state/     In  Natoma  W.  &  M.  Co.  v.  ClarJcin,  14 

1  Russell  V.  Topping,  5  McL.  (U.  S.)  194;  Perrine  v.  Canal  Co.,  9 
How.  (U.  S.)  172;  Moor's  Heirs  v.  Moor's  Devisees, 4  Dana, 854;  Lath- 
rop  V.  Commercial  Bank,  8  Dana  (N.  Y.),  114;  Chambers  v.  St.  Louis, 
29  Mo.  543;  Revanna  Nav.  Co.  v.  Dawson,  3  Grat.  (Va.)  19;  Case  v, 
Kelly,  133  U.  S.  21;  Fritts  v.  Palmer.  132  U.  S.  293. 

inhabitants  of  Sutton  Parish  v.  Cole,  3  Pick.  (Mass.)  232. 

3  Bank  of  Michigan  v.  Niles,  1  Doug.  (Mich.)  401. 

*Natoma,  etc.  Co.  v.  Clarkin,  14  Cal.  543;  Hough  v.  Cook  County, 
etc.  Co.,  73  111.  23;  Hay  ward  v.  Davidson,  41  Ind.  212;  Land  v.  Coff- 
man,  50  Mo.  243;  Whitman  M.  Co.  v.  Baker,  3  Nev.  386;  De  Camp  v. 
Dobbins,  29  N.  J.  Eq.  36;  Bogardus  v.  Trinity  Church,  4  Sand.  Ch. 
(N.  Y.)  633;  Farmers'  T.  &  T.  Co.  v.  Curtis.  7  N.  Y.  466;  Mallett  v. 
Simpson,  94  N.  C.  37;  Leazure  v.  Hillegas,  7  S.  &  R.  (Pa.)  313;  Baird 


§  SI.]  INCIDENTAL    TOWERS    OF   COEPOKATIONS.  129 

Oal.  552,  Mr.  Justice  Field,  in  discussing  this  subject,  said: 
"  Whether  or  not  the  premises  in  controversy  are  neces- 
sary for  these  purposes  it  is  not  material  to  inquire;  that 
is  a  matter  between  the  government  and  the  corporation, 
and  is  no  concern  of  the  defendants.  It  would  lead  to 
infinite  inconvenience  and  embarrassments  if,  in  the  suits 
by  corporations  to  recover  the  possession  of  their  prop- 
erty, inquiries  were  permitted  as  to  the  necessity  of  such 
property  for  the  purposes  of  their  incorporation,  and  the 
title  made  to  rest  upon  the  existence  of  that  necessity." 
And  in  Mallett  v.  Simj)soii,  O-i  1^.  C.  37,  Ashe,  J.,  in  de- 
livering the  opinion  of  the  court,  used  language  to  the 
same  effect,  namely :  "  The  authorities  go  to  the  extent 
that  even  when  the  right  to  acquire  real  property  is  lim- 
ited by  the  charter,  and  the  corporation  transcends  its 
power  in  that  respect,  and  for  that  reason  is  incompetent 
to  take  title  to  real  estate,  a  conveyance  to  it  is  not  void, 
but  only  the  sovereign  (here  the  state)  can  object.  It  is 
valid  until  assailed  in  a  direct  proceeding  instituted  by 
the  sovereign  for  that  purpose."  So  in  Southern  PaclJiG 
li.  Co.  V.  Orto)i,  suj?ra,  it  was  held  that  where  a  cor- 
poration authorized  to  receive  grants  of  land  for  the 
purpose  of  the  corporation  brings  an  action  against  a 
trespasser  to  recover  possession  of  lands  granted  to  it, 
such  trespasser  will  not  be  heard  to  question  the  title  of 
the  corporation  on  the  ground  that  it  had  no  authority  to 
take  them ;  that  that  w^as  a  question  between  the  state  and 
the  corporation.     And  where  a  corporation  is  authorized 

V.  Bank,  11  id.  411;  Goundie  v.  Water  Co.,  7  Pa.  St.  233;  Blunt  v. 
Walker,  11  Wis.  334;  Southern  Pac.  R.  Co.  v.  Orton,  6  Saw.  (C.  C. 
U.  S.)  157;  Ptunyan  v.  Lessee,  etc.,  13  Pet.  (U.  S.)  132;  Cornell  v.  Col- 
orado Springs,  100  U.  S.  55;  Jones  v.  Habersham,  107  U.  S.  174;  Oil 
Co.  V.  Railway  Co.,  32  Fed.  Rep.  22;  Alexander  v.  Tollestou  Club,  110 
III.  65. 

9 


130  INCIDENTAL   POWEKS    OF    CORPOKATIONS.  [§  81. 

to  receive  conveyances  of  and  hold  title  to  real  estate, 
but  is  prohibited  from  so  doing  for  any  but  specified  pur- 
poses, the  question  as  to  the  validity  of  the  title  to  the 
real  estate  conveyed  to  it  cannot  be  made  to  depend  upon 
proof  as  to  whether  the  land  is  held  for  such  specified 
purpose  or  not.  The  title  will  vest  in  the  corporation, 
and  the  question  as  to  whether  the  corporation  has  ex- 
ceeded its  powers  can  be  raised  only  by  the  state  or  by  a 
stockholder.^  And  corporations  chartered  in  one  state, 
and  not  forbidden  by  the  laws  of  its  creation,  may  ac- 
quire and  hold  lands  in  another  state,  unless  prohibited 
from  so  doing  either  by  direct  enactments  of  the  latter 

1  Hough  V.  Cook  County  L.  Co.,  73  111.  23. 

In  Case  v.  Kelly,  supra,  the  court  say:  "A  corporation,  in  order 
to  be  entitled  to  buy  and  sell,  to  receive  and  hold,  the  title  to  real 
estate,  must  have  some  statutory  authority  of  the  state  in  which 
such  lands  lie,  to  enable  it  to  do  so,  and  the  absence  of  such  provis- 
ion in  the  law  of  its  incorporation  does  not  create  any  general  stat- 
ute which  authorizes  any  such  right.  The  enumeration  of  the  pur- 
poses for  which  the  corporation  could  acquire  title  to  real  estate 
must  necessarily  be  held  exclusive  of  all  other  purposes." 

And  in  Fritts  v.  Palmer,  133  U.  S.  293,  Mr.  Justice  Miller,  speak- 
ing of  the  general  powers  of  corporations  to  acquire  and  transfer 
real  estate,  in  his  masterly  dissenting  opinion  says:  "It  has  been 
the  recognized  doctrine  of  this  court  for  a  great  many  years,  per- 
haps a  century,  that  the  transfer  of  title  to  real  estate,  whether  by 
inheritance,  by  purchase  and  sale,  or  by  any  other  mode  by  which 
title  to  property  is  acquired,  is  rightfully  governed  by  the  laws  of 
the  state  in  which  the  laud  is  situated.  The  policy  of  permitting 
corporations  to  hold  real  estate  has  always  been  a  restricted  one. 
Corporate  bodies,  whether  for  public  use  or  private  purposes,  have 
always  been  subjects  of  limitation  on  this  right  to  hold  real  estate. 
It  may  be  prohibited  altogether.  It  may  be  allowed  with  distinct 
limitations  as  to  amount  either  in  quantity  or  in  value.  I  can  con- 
ceive of  cases  where  corporations  have  been  authorized  to  acquire 
a  limited  amount  of  real  estate  such  as  the  legislature  may  conceive 
to  be  useful  and  necessary  to  the  purpose  for  which  they  are  organ- 
ized, or  to  take  propertj'  for  specific  uses,  in  which  the  question  as 
to  whether  they  have  exceeded  that  amount  or  perverted  the  use 
may  be  one  for  the  state  alone,  and  not  of  any  private  person." 


§§  82,  83.]      INCIDENTAL   POWERS   OF   COKPOEATIONS.  131 

state  or  by  its  public  policy,  to  be  deduced  from  settled 
adjudications  of  its  courts.^ 

§  82.  Devises  to  corporations.  —  Generally,  corporations 
may  not  take  lands  by  devise  unless  specially  authorized 
so  to  do,  this  manner  of  acquiring  real  estate  being  regu- 
lated by  statute  or  by  the  provisions  of  its  charter.  In 
'New  York  corporations  have  been  held  incapable  of  tak- 
ing lands  by  devise  unless  so  authorized  by  statute  or  by 
charter,^  whilst  in  Massachusetts  ^  and  Kentucky  *  no  such 
limitations  as  to  devises  to  corporations  existed.  And 
where  the  provisions  in  the  charter  of  a  corporation  per- 
mitted it  to  acquire  land  "  by  direct  purchase  or  other- 
wise," it  was  held  to  have  the  power  to  acquire  by  devise.^ 

§  83.  Jus  disponendi  in  corporations. —  The  power  to 
acquire  real  or  personal  property  in  a  corporation  as  in 
an  individual  implies  absolute  j/i^s  disponendi,  unless  such 
power  be  restrained  by  statute  or  by  considerations  of 
public  policy.^     It  is  a  necessary  incident  to  ownership, 

1  American,  etc.  Union  v.  Yount,  101  U.  S.  352;  Thompson  v.  Wat- 
ers, 25  Mich.  214;  Whitman  Min.  Co.  v.  Baker,  3  Nev.  386;  Lumbard 
V.  Aldrich,  8  N.  H.  31;  State  v.  Boston,  etc.  R.  Co.,  25  Vt.  433;  Props. 
Claremont  Bridge  v.  Royce,  42  id.  730;  Northern  T.  Co.  v.  Chicago, 
7  Biss.  (C.  C.)  45;  s.  C,  99  U.  S.  635;  Carroll  v.  East  St.  Louis,  67  111, 
568;  Santa  Clara  Academy  v.  Sullivan,  116  111.  375. 

-McCartee  v.  Orphan  Asylum,  9  Cow.  (N.  Y.)  437;  Downing  v. 
Marshall,  23  N.  Y.  366;  White  v.  Howard,  46  N.  Y,  144;  Holmes  v. 
Mead,  52  N.  Y.  332. 

3  Dickson  v.  United  States,  125  Mass.  311. 

^  Moor's  Heirs  v.  Moor's  Devisees,  4  Dana  (N.  Y.),  354. 

5  Downing  v.  Marshall,  23  N.  Y.  366. 

6  2  Kent,  Com.  281;  Burton's  Appeal,  57  Pa.  St.  213:  Reichwald  v. 
Commercial  Hotel,  106  111.  439;  Binney's  Case,  2  Bland  (xMo.),  97;  Ar- 
desco  Oil  Co.  v.  N.  A.  Min.  etc.  Co.,  66  Pa.  St.  375,  382;  State  v.  Col- 
lege, 38  Cal.  161;  Miners'  Ditch  Co.  v.  Zellerbach,  37  Cal.  543;  Canal 
Co.  V.  Vallette,  21  How.  (U.  S.)  424;  Partridge  v.  Badger,  25  Barb. 


132  INCIDENTAL   POWEKS    OF   COKPOKATIONS.  [§  83. 

and  has  the  power  Avithout  any  express  grant.  A  corpo- 
ration ma}'"  therefore,  in  the  absence  of  any  such  restraint, 
sell  whatever  it  has  the  right  to  own.  So  it  may  sell  all 
its  corporate  property  for  a  corporate  or  lawful  purpose.^ 
Thus,  where  a  corporation,  organized  for  the  purpose  of 
creating  a  water-power,  finds  that  it  can  no  longer  profit- 
ably use  its  privileges,  and  its  water-power  has  been  ex- 
tinguished by  contract  with  the  state,  it  may  sell  its  lands 
and  receive  payment  therefor  in  its  own  stock.^  So,  a 
corporation  organized  for  the  purpose  of  owning  ditches 
for  the  conveyance  and  sale  of  water  has  power  to  sell 
and  convey  all  its  corporate  property,  provided  the  sale 
is  made  for  corporate  purposes,  and  strangers  taking  a 
conveyance  are  entitled  to  assume,  as  against  the  corpo- 
ration, that  the  sale  was  for  a  lawful  purpose.^  The  fore- 
going rules  apply  more  particularly  to  strictly  private 
corporations,  established  solely  for  trading  or  manufact- 
uring purposes,  and  in  the  management  of  which  neither 
the  public  nor  the  state  has  any  direct  concern.* 

(N.  Y.)  146;  Barry  v.  Merchants'  Exchange,  1  Sandf.  Ch.  (N.  Y.)  280; 
Burr  V.  Glass  Co.,  14  Barb.  (N.  Y.)  358;  Dater  v.  Bank,  5  Watts  &  S. 
(Pa.)  223;  Frazier  v.  Wilcox,  4  Rob.  517;  United  States  Bank  v.  Huth, 
4  B.  Mon.  (Ky.)  423;  State  v.  Bank,  6  Gill  &  J.  (Md.)  323;  Pierce 
Y.  Emery.  32  N.  H.  484;  Reynolds  v.  Commissioners,  5  Ohio,  205; 
De  Ruyter  v.  St.  Peter's  Ch.,  3  N.  Y.  238;  Clark  v.  Titcomb,  42  Barb. 
(N.  Y.)  122;  Central  Gold  M.  Co.  v.  Piatt,  3  Daly  (N.  Y),  263;  Banks 
V.  Poitiaux,  3  Rand.  (Va.)  136. 

1  Miners'  Ditch  Co.  v.  Zellerbach,  37  Cal.  543;  Sargent  v.  Webster, 
13  Met.  (Mass.)  498;  Tread  well  v,  Salisbury  Mfg.  Co.,  7  Gray  (Mass.), 
393;  Hodges  v.  Screw  Co.,  1  R.  I.  332,  3  R.  I.  9;  Dupee  v.  Boston 
Water-power  Co.,  114  Mass.  37. 

2  Dupee  V.  Boston  Water-power  Co.,  114  Mass.  37. 

3  Miners'  Ditch  Co.  v.  Zellerbach,  37  Cal.  543. 

estate  V.  College,  38  Cal.  166;  Commonwealth  v.  Smith,  10  Allen 
(Mass.),  448;  Webster  v.  Turner,  12  Hun  (N.  Y).  264;  Hancock  v. 
Holbrook,  4  Woods  (U.  S.  C.  C),  53;  Sheldon  Hat  Co.  v.  Eickemeyer, 
etc.  Co.,  90  N.  Y  613;  Dupee  v.  Boston  Water-power  Co.,  114  Mass.  37; 
Buford  V.  Keokuk  Packet  Co.,  3  Mo.  App.  159. 


§  8-1.]  INCIDENTAL   POWERS    OF   COKPOKATIONS.  133 

§  84.  Poiver  to  sell  and  convey  implies  poiver  to  mort- 
gage.—  Power  in  a  corporation  to  alienate  its  real  prop- 
erty absolutely,  clearly  carries  with  it  the  implied  power 
to  mortgage  for  corporate  purposes.  It  may  therefore, 
in  the  absence  of  any  prohibition  in  its  charter  or  the 
law  of  its  organization,  borrow  money  for  the  purpose  of 
carrying  out  the  legitimate  objects  of  its  incorporation, 
and  mortgage  its  realty  to  secure  the  same.^  And  it  has 
lately  been  held  that  a  corporation,  acting  in  good  faith 
and  without  any  purpose  of  defrauding  its  creditors,  but 
with  the  sole  object  of  continuing  a  business  which  prom- 
ises to  be  successful,  may  give  a  mortgage  to  directors 
who  have  lent  their  credit  to  it,  in  order  to  induce  a  con- 
tinuance of  that  credit,  and  to  obtain  renewals  of  matur- 
ing paper  at  a  time  when  the  corporation,  although  it 
may  not  be  then  in  fact  possessed  of  assets  equal  at  cash 
prices  to  its  indebtedness,  is  in  fact  a  going  concern,  and 
is  intending  and  expecting  to  continue  in  business.^  And 
it  has  been  held  that  a  corporation,  authorized  by  its 
charter  to  purchase,  hold  and  convey  such  real  estate  as 
was  requisite  and  necessary  for  the  transaction  of  the 
business  for  which  it  was  created,  or  such  as  had  been 
mortgaged  or  conveyed  to  it  for  the  security  or  payment 
of  debts  due  it,  might  mortgage  such  realty  to  secure  a 
debt  owing  by  it.*  So  an  agricultural  society  may  mort- 
gage its  fair  grounds  to  raise  money  to  advance  the  ob- 

1  Aurora  Agl.  Soc.  v.  Paddock,  80  111.  263;  Thompson  v.  Lambert, 
44  Iowa,  239;  Beardstown,  etc.  R.  Co.  v.  Metcalf,  4  Met.  (Mass.)  199; 
Susquehanna  Bridge  Co.  v.  Insurance  Co.,  3  Md.  305;  Richards  v. 
Railroad  Co.,  44  N.  H.  185;  Jackson  ex  dem.  People  v.  Brown,  5 
Wend.  (N.  Y.)  590;  Barry  v.  Merchants'  Exch.,  1  Sandf.  Ch.  (N.  Y.)  280; 
Burt  V.  Rattle,  31  Ohio  St.  116;  Gordon  v.  Preston,  1  Watts  (Pa.),  385; 
Watts'  Appeal,  78  Pa.  St.  370;  Leggett  v.  Banking  Co.,  1  Sax.  Ch. 
(N.  J.)  541 ;  s.  C,  23  Am.  Dec.  728. 

2Sanford  Tool  Co.  v.  Howe,  Brown  &  Co.,  157  U.  S.  312. 

3  Jackson  ex  dem.  People  v.  Brown,  5  Wend.  (N.  Y.)  590. 


134  INCIDENTAL   POWERS    OF   CORPOKATIONS.  [§  85. 

jects  of  its  creation.^  And  a  corporation  created  for  the 
puriJose  of  building  a  public  exchange  building  may  mort- 
gage its  realty  to  carry  out  that  object.^ 

§85.  Power  ofMnk  to  hold  and  sell  real  estate. —  A 
bank  is  usually  authorized  by  its  charter  to  acquire,  hold 
and  sell  real  estate  that  may  be  necessary  for  its  banking 
purposes,  or  conveyed  to  it  in  satisfaction  of  a  debt  con- 
tracted in  the  course  of  its  dealings,  or  purchased  by  it  at 
a  sale  under  a  mortgage  held  by  the  bank.'  But  holding, 
acquiring  and  selling  to  ^.nj  greater  extent  or  for  any 
other  purpose  than  is  set  forth  in  its  charter  is  illegal.'* 
So  the  power  to  convey  real  estate  includes  the  power  to 
mortgage  it;  and  power  to  purchase  includes  power  to 
sell.^ 

1  Thompson  v.  Lambert,  45  Iowa,  239. 

2  Barry  v.  Merchants'  Exchange,  1  Sandf.  Ch.  (N.  Y.)  280. 
^Thomaston  Bank  v.  Stimpson,  21  Me.  195;  Jackson  v.  Brown,  5 

Wend.  (N.  Y.)  590. 

metropolitan  Bank  v.  Godfrey,  23  111,  579;  Bank  of  Michigan  v. 
Niles,  1  Doug.  (Mich.)  401;  Pacific  R.  Co.  v,  Seeley,  45  Mo.  211;  Chap- 
man v.  Colby,  47  Mich.  51;  Case  v.  Kelly,  133  U.  S.  21;  Russell  v. 
Topping,  5  McLean  (U.  S.),  194. 

6  Jackson  v.  Brown,  supra. 

In  Russell  v.  Topping,  supra,  the  lines  are  rather  finely  drawn. 
In  that  case  a  bank  under  its  charter  had  power  to  purchase,  hold 
and  convey  real  estate  as  follows:  "First,  such  as  shall  be  required 
for  its  immediate  accommodation  in  the  transaction  of  its  business, 
or  such  as  shall  have  been  mortgaged  to  it  in  good  faith  by  way  of 
security  for  loans  previously  contracted  for  money  due;  or  second, 
such  as  shall  have  been  conveyed  to  it  in  satisfaction  of  debts  previ- 
ously contracted  in  the  course  of  its  dealings;  or  third,  such  as  shall 
have  been  purchased  at  sales  upon  judgments,  decrees  or  mortgages 
obtained  or  made  for  such  debts;  and  said  bank  shall  not  purchase, 
hold  or  convey  real  estate  in  any  other  case,  or  for  any  other  pur- 
pose," etc.  The  facts  are  stated  by  the  court  as  follows:  It  appears 
that  a  man  by  the  name  of  Howard,  being  indebted  to  the  plantiff, 
gave  him  a  mortgage  on  some  real  property  to  secure  the  debt. 


§  86.]  INCIDENTAL    POWERS    OF    COKrOKATIONS.  135 

§  80.  Power  to  acquire  real  i^roperUj  hij  right  of  emi- 
nent domain. —  Corporations  of  a  quasi-^\xh\ic,  character 
have  been  authorized  to  take  private  property  for  the  pur- 
pose of  making  public  highways,  turnpike  roads  and  canals, 
of  erecting  wharves  and  basins,  of  establishing  ferries,  of 
draining  swamps  and  marshes,  and  of  bringing  water  to 
cities  and  villages.^    But  statutes  delegating  the  right  of 

which  included  the  tract  in  question.  Tlie  plaintiff  foreclosed  his 
mortgage  by  a  proceeding  on  the  equity  side  of  this  court.  The 
State  Bank  of  Illinois  was  made  a  party  defendant,  and  filed  an 
answer  to  the  bill,  alleging  that  Howard  was  largely  indebted  to  the 
bank,  for  which  indebtedness  a  mortgage  had  been  given  by  Howard, 
but  subsequent  to  that  of  the  plaintiff,  and  which  included  several 
parcels  of  land  conveyed  by  the  plaintiff's  prior  mortgage,  but  not 
the  lot  in  controversy.  At  this  time  Howard  was  insolvent,  and 
the  bank  asked  that  the  lands  not  included  in  this  mortgage  should 
first  be  sold  to  pay  the  plaintiff's  debt,  and  that  the  lands  included 
in  the  mortgage  of  the  bank  (and  which  were  also  in  the  plaintiff's 
mortgage)  should  be  sold  only  in  the  event  of  the  other  lands  not 
being  sufficient  to  pay  the  plaintiff's  debt.  The  court  decreed  ac- 
cordingly, and  ordered  that,  unless  the  plaintiff's  debt  be  paid  within 
twenty  days,  the  land  should  be  sold  by  a  commission.  It  was  sold 
in  pursuance  of  the  decree.  At  the  sale  the  bank  purchased  the 
tract  in  controversy,  and  a  deed  was  made  to  the  bank  by  the  com- 
missioners. The  defendants  claim  through  the  bank.  The  plaint- 
iff received  the  purchase  money  paid  by  the  bank.  Howard  being 
liable  to  the  plaintiff  for  other  indebtedness,  suit  was  brouglit  against 
him  by  the  plaintiff,  judgment  recovered,  execution  issued,  and  the 
tract  in  question  levied  on  and  sold.  At  that  sale  the  plaintiff  was 
the  purchaser,  and  he  now  holds  a  deed  for  the  premises.  Both 
parties  claiming  through  Howard,  his  title  is  not  questioned.  After 
a  thorough  examination  of  the  subject  it  was  held  by  the  court 
that  such  purchase  by  the  bank  was  ultra  vires;  that  the  receipt  of 
the  purchase  price  of  such  property  from  the  bank  did  not  estop  the 
persons  receiving  it  from  disputing  the  power  of  the  bank  to  pur- 
chase the  property,  and  that  its  grantee  in  possession  of  such  prop- 
erty could  be  ejected. 

1  Beekman  v.  Saratoga  R.  Co.,  3  Paige  (N.  Y.),  44;  Johnson  v.  Utica 
Water-works,  67  Barb.  (N.  Y.)  415;  Inhabitants  of  Wayland  v.  Com- 
missioners, 4  Gray  (Mass.),  500;  lu  re  Mt.  Washington  R.  Co.,  35 


136  INCIDENTAL    POWEKS    OF   COKPORATIONS.  [§  S7, 

eminent  domain  to  corporations  are  not  to  be  extended 
by  implication  and  must  be  strictly  complied  vvith.^  The 
real  estate  acquired  by  a  public  corporation  in  the  exer- 
cise of  a  delegated  right  of  eminent  domain  and  necessary 
for  uses  in  which  the  public  is  concerned  cannot  be  sold 
under  execution  apart  from  the  franchise  and  its  inci- 
dents so  as  to  give  the  purchaser  a  title  to  the  property 
divested  of  all  the  duties  and  obligations  assumed  by  the 
company.^ 

§  87.  Alienation  hj  deed. —  The  right  of  alienation  is, 
as  we  have  seen,'  an  incident  of  ownership,  and  belongs 
to  a  corporation  as  well  as  to  an  individual,  when  no  re- 
straint is  imposed  in  the  charter.*  As  a  general  rule,  deeds 
of  conveyance  by  a  corporation  must  be  executed  in  the 
corporate  name  and  under  the  corporate  seal.^  It  is  also 
a  general  principle  that  a  conveyance  of  property  b}'  a 
corporation  may  be  executed  like  a  conveyance  by  an  in- 
dividual through  any  agent  having  authority  to  represent 
the  company  for  that  purpose.® 

N.  H.  134;  Hildreth  v,  Lowell,  11  Gray  (Mass.),  345;  Reeves  v.  Wood 
Co.,  8  Ohio  St.  333;  Barrington  v.  Neuse  River,  69  N.  C.  165;  Curry 
V.  Mt.  Sterling,  15  111.  320;  East  St.  Louis  v.  St.  John,  47  111.  463;  Pat- 
terson V.  Boom  Co.,  3  Dill.  (U.  S.)  465;  Re  Corporation  of  Hadders- 
field,  10  Ch.  App.  92. 

iTrumpler  v.  Bernerly,  39  Cal.  490;  N.  Y.  etc.  R.  Co.  v.  Kip,  46 
N.  Y.  546;  Iron  R.  R.  Co.  v.  Ironton,  19  Ohio  St.  299;  People  v. 
Brighton,  10  Mich.  57;  Leslie  v.  St.  Louis,  47  Mo.  474. 

2  Gooch  V.  McGee,  83  N.  C.  59. 

3  §83. 

4  Burton's  Appeal,  57  Pa.  St.  213;  Dana  v.  Bank,  5  W.  &  S.  (Pa.) 
243;  Walker  v.  Vincent,  19  Pa.  St.  369. 

6  Boone,  Corp.,  §  54;  Hatch  v.  Barr,  1  Ohio,  390;  Miners'  Ditch  Co. 
V.  Zellerbach,  37  Cal.  543;  Hutchins  v.  Byrnes,  9  Gray  (Mass.),  367; 
Flint  V.  Clinton  Co.,  12  N.  H.  430;  Tenney  v.  E.  Warren  L.  Co.,  43- 
id.  343. 

6Musser  v.  Johnson,  42  Mo.  74;  Morris  v.  Kiel,  20  Minn.  531;  Nason- 


§§  88,  89.]       INCIDENTAL    POWEKS    OF    CORPORATIONS.  lot 

§  88.  Conveyance  of  corporate  lands  hj  agent. —  A  cor- 
poration cannot  appoint  an  agent  to  convey  lands  except 
by  vote  of  its  directors  or  other  managing  board,  in  whom 
the  power  to  sell  is  reposed  by  charter  or  by  the  general 
laws;  and  without  legal  proof  of  such  corporate  act  a 
deed  purporting  to  be  executed  in  its  name  by  an  agent 
is  not  evidence  of  title,  though  it  may  operate  as  color  of 
title.^  If  the  corporation  be  held  to  have  ratified  the 
acts  of  one  assuming  to  act  as  its  agent  in  selling  and  con- 
veying lands,  by  its  knowledge  of  the  fact  that  he  w^as 
so  acting,  siich  a  ratification  would  only  operate  as  an 
equitable  estoppel,  of  which  courts  of  law  cannot  take 
cognizance  in  an  action  involving  the  legal  title.^  The 
authority  of  the  agent  need  not  be  under  seal.' 


§  89,  Acknowledgment  of  corporate  deeds. —  The  certifi- 
cate to  the  deed  of  a  corporation  should  state  the  minis- 
terial position  of  the  officer  who  affixes  the  corporate 
seal,  the  authority  under  which  he  acts,  that  he  know^s 
the  corporate  seal,  and  that  the  same  is  affixed  to  the 
conveyance  by  the  order  of  the  board  of  directors  or 
other  trustees  of  the  corporation,  and  that  he  subscribes 
his  name  thereto  as  a  witness  to  the  execution  thereof.* 

V.  King  Mountain  M.  Co.,  90  N.  C.  417;  Hutchins  v.  Byrnes,  9  Gray 
(Mass.),  367;  Blackshire  v.  Homestead  Co.,  39  Iowa,  624;  Hamilton 
V.  McLaughlin,  13  N.  E.  Rep.  (Mass.,  1887)  424;  Haven  v.  Adams,  4 
Allen  (Mass.),  80. 

1  Standifer  v.  Swann.  78  Ala.  88;  Tenney  v.  Lumber  Co.,  43  N.  H. 
343;  Burr  v.  McDonald,  3  Grat.  (Va.)  215;  Hopkins  v.  Gallatin  Turn- 
pike Co.,  4  Humph.  (Tenn.)  403. 

2  Standifer  v.  Swann,  78  Ala.  80. 

3  Hopkins  v.  Gallatin  Turnpike  Co.,  4  Humph.  (Tenn.)  403,  4  Am. 
&  Eng.  Ency.  Law,  240;  Beckwith  v.  Windsor  Mfg.  Co.,  14  Conn. 
594. 

44  Am.  &  Eng.  Ency.  Law,  242;  Lovett  v.  Sawmill  Ass'n,  6  Paige 
(N.  Y.),  54. 


13S  INCIDENTAL    POWEES    OF    COKPOEATIONS.       [§§  90,  91. 

If  no  particular  mode  of  acknowledgment  of  deeds  of 
corporations  is  directed  by  statute,  and  a  deed  is  ac- 
knowledged by  the  oiRcer  who  affixes  the  seal  thereto,  it 
is  a  sufficient  compliance  with  general  laws  requiring  a 
deed  to  be  acknowledged  by  the  "  grantor."  ^ 

§  90.  Affixing  corporate  seal  to  deeds. —  The  corporate 
name  should  be  used  and  the  corporate  seal  must  be  af- 
fixed, though  a  seal  adopted  for  the  occasion  has  been 
permitted.2  A  deed  of  trust  executed  by  officers  of  a 
corporation  in  their  own  names  by  mistake,  but  intended 
as  the  deed  of  the  corporation,  was  held  capable  of  being 
reformed  in  equity.^  Where  the  president  or  other  offi- 
cer of  the  corporation  executes  a  deed  in  his  own  name 
and  under  his  own  seal,  it  is  invalid,  because  not  the  deed 
of  the  company.*  The  deed  of  the  corporation  can  be 
proved  only  by  proving  that  the  seal  affixed  is  the  seal  of 
the  corporation,  or  that  it  was  affixed  as  the  corporate 
seal  by  an  officer  of  the  corporation  or  other  person 
thereto  duly  authorized.^ 

§  91.  Assignment  of  property  for  benefit  of  creditors. — 
Another  mode  of  alienation  by  a  corporation  of  its  prop- 
erty is  by  assignment  for  benefit  of  creditors ;  and,  unless 
there  be  some  provision  in  the  statute  under  which  the  in- 
corporation takes  place  prohibiting  it,  a  corporation  may 
make  an  assignment  of  its  property  for  the  benefit  of 
creditors.^     So  an  insolvent  corporation,  it  has  been  held, 

1  Boone  on  Corp.,  §  54;  Kelly  v.  Calhoun,  95  U.  S.  710. 

2  Hutchins  v.  Byrnes,  9  Gray  (Mass.),  367. 

3  West  V.  Madison  Co.  Ag.  Board,  82  111.  205. 

*  Wheelock  v.  Moulton,  15  Vt.  519;  Isham  v.  Bennington  Iron  Co., 
19  Vt.  230;  Hatch  v.  Barr,  1  Ohio,  390. 

5  Osborne  v.  Tunis,  25  N.  J.  L.  633, 

6  Lamb  v.  Cecil,  25  W.  Va.  288;  Planters'  Bank  v.  Whittle,  78  Va. 
737;  Whitwell  v.  Warner,  20  Vt.  425;  Dabney  v.  Bank,  3  S.  C.  124; 


§  92.]  IXCIDEXTAL    POWERS    OF    COKl'OKATIONS.  139 

may  sell  and  transfer  its  propert}',  and  may  prefer  its 
creditors,  unless  prohibited  by  law.^  Eut  corporations 
and  their  officers  may  not  divert  the  corporate  property 
from  the  payment  of  debts.^  An  assignment  which  pur- 
ports on  its  face  to  be  the  contract  of  the  company,  and 
is  signed  by  the  president  for  the  company,  is  the  com- 
pany's con  tract.''  And  it  has  been  held  that  shares  of 
stock  of  a  corporation  owned  by  it  may  be  assigned  to  a 
creditor  in  satisfaction  of  a  debt,  though  the  creditor  may 
have  been  a  trustee,  and  took  part  in  the  proceedings  au- 
thorizing the  assignment,  if  the  proceedings  were  after- 
ward ratified  by  the  corporation.^ 

§  92.  Power  to  act  as  tri'ustee. —  It  is  now  well  estab- 
lished, and  may  be  laid  down  as  a  general  rule,  that  a 
corporation  with  legal  capacity  to  hold  property  may 
take  and  hold  it  in  trust,  in  the  same  manner  and  to  the 
same  extent  as  a  private  individual  may  do.*   As  the  court 

Ardesco  Oil  Co.  v.  North  Am.  Co.,  G6  Pa.  St.  375;  Coates  v.  Donnell, 
94  N.  Y.  168;  Arthur  v.  Bank,  17  Miss.  394;  Pierce  v.  Emery,  32  N.  H. 
484;  Lionberger  v.  Broadway  Bank,  10  Mo.  App.  499;  Shockley  v. 
Fisher,  75  Mo.  498;  Covert  v.  Rogers,  38  Mich.  363;  Merrick  v.  Bank, 
S  Gill  (Mo.),  59;  Union  Bank  v.  Elliott,  6  Gill  &  J.  (Md.)  363;  Sargent 
V.  Webster,  13  Met.  (Mass.)  497;  Reich vvald  v.  Hotel  Co.,  106  111.  439; 
De  Camp  v.  Alward,  53  Ind.  468;  Savings  Bank  v.  Bates,  8  Conn.  23; 
Ringo  V.  Biscoe,  13  Ark.  563;  Canal  Co.  v.  Vallette,  21  How.  (U.  S.) 
414. 

1  Bergen  v.  Fishing  Co.,  42  N.  J.  Eq.  397,  41  N.  J.  Eq.  238;  Wilkin- 
son V.  Bauerle,  41  N.  J.  Eq.  635. 

2  Wilkinson  v.  Bauerle,  supra. 

3  Gottfried  v.  Miller,  104  U.  S.  521. 

i  Reed  v.  Hoyt,  51  N.  Y.  Sup.  Ct.  121. 

5Vidal  V.  Girard,  2  How,  (U.  S.)  127;  First  Cong.  Soc.  v.  Atwater, 
23  Conn.  34;  Phillips  Acad.  v.  King,  12  Mass.  546;  First  Parish,  etc. 
V,  Cole,  3  Pick.  (Mass.)  232;  Wade  v.  American,  etc.  Soc,  7  Sm.  &  M. 
(Miss.)  663;  Robertson  v.  Bullions,  11  N.  Y.  243;  Farmers,'  etc.  Co.  v. 
Insurance  Co.,  51  Barb.  (N.  Y.)  33;  Lincoln  Sav.  Bank  v.  Ewing,  13 
Lea  (Tenn.),  518;  Montpelier  v.  East  Montpelier,  29  Vt.  12. 


140  INCIDENTAL    POWERS    OF    CORPORATIONS.       [§§  93,  94:. 

say  in  Yidal  v.  Gipard,  supra:  "  Although  it  was  in  early 
times  held  that  a  corporation  could  not  take  and  hold 
real  or  personal  estate  in  trust,  upon  the  ground  that 
there  was  a  defect  of  one  of  the  requisites  to  create  a 
good  trustee,  namely,  the  want  of  confidence  in  the  per- 
son, yet  that  doctrine  has  long  since  been  exploded  as  too 
artificial;  and  it  is  now  held  that  where  a  corporation 
has  a  legal  capacity  to  take  real  and  personal  estate,  it 
may  take  and  hold  it  upon  trust  in  the  same  manner  and 
to  the  same  extent  as  a  private  individual  may  do." 

§  93.  Trust  must  he  wUMn  scope  of  corjyorate  inirposes. 
But  a  corporation  cannot  be  a  trustee  unless  the  objects 
and  purposes  which  the  trust  is  intended  to  accomplish 
are  within  the  general  scope  of  the  purposes  of  the  cor- 
poration, and  the  trust  relates  to  matters  which  will  pro- 
mote and  aid  its  general  purposes.^  So  a  corporation 
may  hold  and  execute  a  trust  for  charitable  objects  in 
accord  with  or  tending  to  promote  the  purposes  of  its 
creation,  although  such  as  it  might  not,  by  its  charter  or 
by  general  laws,  have  authority  itself  to  establish  or  to 
spend  its  corporate  funds  for."^  But  where  property  is  de- 
vised to  a  corporation,  partly  for  its  own  use  and  partly 
in  trust  for  others,  the  power  to  take  the  property  for  its 
own  use  carries  with  it  the  power  to  execute  the  trust  in 
favor  of  others.^ 

§  94.  Cannot  he  compelled  to  execute  repugnant  trust. — 
If  the  trust  be  repugnant  or  inconsistent  with  the  proper 

1  Trustees  v,  Peaslee,  15  N.  H.  317;  Mason  v.  Methodist  Episcopal 
Church,  27  N,  J.  Eq.  47. 

2  Jones  V.  Habersham,  107  U.  S.  174;  Vidal  v.  Girard,  3  How.  (U.  S.) 
27;  McDonough  v.  Murdock,  15  How.  367;  Perin  v.  Carey,  24  How. 
465. 

3  In  re  Howe,  1  Paige  (N.  Y.),  214;  Wetmore  v.  Parker,  52  N.  Y. 
450. 


§  95.]  INCIDENTAL   POWERS    OF   CORrORATIONS.  141 

purposes  for  which  the  corporation  was  created,  it  cannot 
be  compelled  to  execute  the  trust  ;^  but  in  proper  cases, 
the  performance  of  the  trusts  confided  to  corporations 
may  be  enforced.^  And  a  corporation  which  expressly 
accepts  a  donation  upon  the  trusts  and  for  the  purposes 
for  which  it  was  given  cannot  afterwards  renounce  it,  but 
may  be  compelled  to  apply  it  to  those  purposes.^ 

§  95.  Poiver  to  talce  l)y  Ijequest. —  In  the  absence  of  any 
statutory  restriction,  corporations  may  take  bequests  of 
personal  property  the  same  as  individuals.*  So  it  has 
been  held  that  a  bequest  to  a  corporation  of  its  own  stock 
is  valid.^  The  following  bequests  have  been  sustained: 
of  money  to  a  church  to  be  laid  out  in  bread,  annually, 
for  ten  years  for  the  poor  of  the  congregation,  and  of 
another  sum  for  the  education  of  students  for  the  min- 
istry ;  ^  a  bequest  to  a  city  of  money  to  purchase  a  lot 
and  erect  thereon  a  hospital  for  the  indigent  blind  and 
lame ;  ^  of  money  for  the  relief  of  such  indigent  residents 
as  the  town  trustees  should  select;  ^  of  money  to  a  town 
to  buy  land  and  erect  a  town  hall  thereon.^ 

1  Vidal  V.  Girard,  supra. 

2  Chambers  v.  Baptist  Soc,  1  B.  Mon.  (Ky.)  215;  Hadden  v.  Chorn, 
8  id.  70;  Van  Houten  v.  Dutch  Church,  17  N.  J.  Eq.  126;  Congrega- 
tional Church  V.  Trustees,  19  Pick.  (Mass.)  492;  University  v.  Yarrow, 
23  Beas.  (N.  J.)  159;  Thornton  v.  Howe,  31  Beas.  (N.  J.)  14;  Shore  v. 
Wilson,  9  CI.  &  F.  355. 

SAmer.  Acad.  v.  Howard  Co.,  12  Gray  (Mass.),  583;  Drury  v.  In- 
habitants, 10  Allen  (Mass.),  169. 

^  Boone,  Corp.,  §  52;  McCartee  v.  Orphan  Asylum,  9  Cow.  (N.  Y.) 
437;  Trustees  v.  King,  12  Mass.  546;  Dutch  Church  v.  Brandow,  52 
Barb.  (N.  Y.)  228;  New  York  Inst.  v.  Howe,  10  N.  Y,  84. 

s  Revanna  Nav.  Co.  v.  Dawson,  3  Grat.  (Va.)  19. 

6  Whitman  v.  Lex,  17  S.  &  R.  (Pa.)  88. 

7  Mayor  v.  Elliott,  3  Rawle  (Pa.).  170. 
sShotwell  V.  Mott,  2  Sand.  Ch.  (N.  Y.)  46. 

a  Coggeshell  v.  Pelton,  7  John.  Cli.  (N.  Y.)  292. 


143  INCIDENTAL   POWERS   OF   CORPORATIONS.  [§  96, 

§  96.  Poirer  to  borrow  money. —  At  the  present  time  it 
seems  to  be  generally  conceded  that  private  corporations 
organized  for  the  purpose  of  pecuniary  profit  have,  un- 
less specially  restricted  in  this  particular,  the  implied 
power  to  borrow  mone3\^     This  power  would  seem  nec- 

1  Memphis,  etc.  Ry.  Co.  v.  Dow,  120  U.  S.  287;  Mahoney  Min.  Co.  v, 
Anglo-Cal.  Bank,  104  U.  S.  192;  Gorrell  v.  Life  Ins.  Co.,  63  Fed.  Rep. 
371;  Chicago,  etc.  R.  Co.  v.  Howard,  7  Wall.  (U.  S.)  392  i  Canal  Co.  v. 
Valletta,  21  How.  414;  Partridge  v.  Badger,  25  Barb.  (N.  Y.)  140; 
Barry  v.  Merchants'  Exchange,  1  Sandf.  Ch.  (N.  Y.)  280;  Farnum  v. 
Blackstone  Canal,  1  Sunin.  (U.  S.)  46;  Lucas  v.  Pitney,  27  N.  J.  L. 
221;  Munn  v.  The  Commission,  15  John.  (N.  Y.)  44;  Mott  v.  Hicks,  1 
Cow.  (N.  Y.)  513;  Kelly  v.  Mayor,  etc..  4  Hill  (N.  Y),  263;  Hacketts- 
town  V.  Swackhamer,  8  Vroom  (X.  J.),  191;  Beers  v.  Phoenix  Glass 
Co.,  14  Barb.  (N.  Y.)  358;  Clark  v.  Titcomb,  43  Barb.  (N.  Y.)  122; 
Commissioners  v.  Railway,  77  N.  C.  289:  Tucker  v.  City  of  Raleigh, 
75  N.  C.  267;  Barnes  v.  Ontario  Bank,  19  N.  Y.  152;  Smith  v.  Law,  21 
N.  Y.  296;  Nelson  v.  Eaton,  26  N.  Y.  410;  Bradley  v.  Ballard,  55  111. 
413:  Mobile,  etc.  Ry.  v.  Talman,  15  Ala.  474;  Moss  v.  Academy,  7 
Heisk.  (Tenn.)  283;  Oxford  Ins.  Co.  v.  Spradley,  46  Ala.  98;  Alabama, 
etc.  Co.  V.  Central  Association,  54  Ala.  73;  Bank  v.  Chillicothe,  7 
Ohio,  415;  Ridgway  v.  Bank,  13  S.  &  R.  (Pa.)  256;  Magee  v.  Moke- 
lumne,  etc.  Co.,  5  Cal.  258;  Hamilton  v.  New  Castle  Ry.,  9  Ind.  359; 
Rockwell  V.  Elkhorn  Bank,  13  Wis.  653;  Fay  v.  Noble,  12  Cush. 
(Mass.)  188;  Commercial  Bank  v.  Newport  Mfg.  Co.,  1  B.  Mon.  (Ky.) 
13;  Holbrook  v.  Bassett,  5  Bosw.  (N.  Y.)  147;  Furniss  v.  Gilchrist,  1 
Sandf.  Sup.  Ct.  (N.  Y.)  53;  Forbes  v.  Marshall,  L.  R.  11  Ex.  166;  Re 
International  Ins.  Co.,  10  Eq.  312;  Australian,  etc.  Co.  v.  Mounsey,  4 
K.  &  J.  733;  In  re  German  ]\I.  Co.,  4  De  G.,  M.  &  G.  19;  Taylor  v.  Agl. 
Ass'n,  68  Ala.  229;  Savanna,  etc.  R.  Co.  v.  Lancaster,  63  Ala.  555; 
Smith  V.  Eureka  F.  Mills,  6  Cal.  1;  Union  Min.  Co.  v.  Bank,  3  Colo. 
248;  Ward  v.  Johnson,  95  111.  215;  Smead  v.  Indianapolis,  etc.  R.  Co., 
11  Ind.  104;  Thompson  v.  Lambert,  44  Iowa,  239;  Booth  v.  Robinson, 
55  Md.  419;  England  v.  Dearborn,  141  Mass.  590;  Donnell  v.  Lewis 
Co.  Bank,  80  Mo.  165;  Connecticut  R.  Sav.  Bank  v.  Fiske,  60  N.  H. 
363;  Kent  v.  Quicksilver  M.  Co.,  78  N.  Y.  159;  Curtis  v.  Leavitt,  15 
N.  Y.  9;  Larwell  v.  Hanover  Sav.  Soc,  40  Ohio  St.  274;  Union  Bank 
V,  Jacobs,  6  Humph.  (Tenn.)  515;  Burr  v.  McDonald,  3  Grat.  (Va.) 
215;  Gibbs'  Case,  L.  R.  10  Eq.  312;  Bank  of  Australasia  v.  Breilat, 
6  Moore,  P.  C.  152;  4  Am.  &  Eng.  Enc.  Law,  222. 

In  Hackettstown  v.  Swackhamer,  supra,  the  court  say:     "This 


§  96.]  INCIDENTAL   POWERS    OF   COKPORATIONS.  l-iS 

essarily  incident  to  every  corporation  whose  business  in- 
volved the  expenditure  of  large  sums  of  money,  and  often 
upon  sudden  and  unforeseen  contingencies.  But  when 
there  is  an  express  prohibition  against  borrowing,  it  must 
be  obeyed,  and  in  a  case  of  a  company  or  society  consti- 
tuted for  special  purposes,  no  borrowing  can  be  permitted 
without  express  authority,  unless  it  be  proper]}^  incident 
to  the  course  and  conduct  of  the  business  for  its  proper 
purposes.^ 

result  is  the  appropriate  product  of  the  principle  that  corpo- 
rate powers  which  are  the  necessary  accompaniments  of  powers 
conferred  will  be  implied.  In  these  instances  the  ability  to  borrow 
money  is  so  essential  that  without  it  the  business  authorized  could 
not  be  conducted  with  reasonable  efficiency;  and,  as  it  cannot  be 
supposed  that  it  was  the  legislative  intent  to  leave  the  company  in 
so  imperfect  a  condition,  the  inference  is  properly  drawn  that  the 
power  to  raise  money  in  this  mode  is  inherent  in  the  very  constitu- 
tion of  such  corporate  bodies.  Such  a  deduction  is  simply,  in  effect, 
a  conclusion  that  the  law-maker  designed  to  authorize  the  use  of 
the  means  fitted  to  accomplish  the  purpose  in  view.  It  has  been 
often  said  that  the  means  which  can  thus  be  raised  up  by  implica- 
tion must  be  necessary  to  the  successful  prosecution  of  the  enter- 
prise, and  that  the  circumstance  that  they  are  convenient  will  not 
legalize  their  introduction.  But  the  necessity  here  spoken  of  does 
not  denote  absolute  indispensableness,  but  that  the  power  in  ques- 
tion is  so  essential  that  its  non-existence  would  render  the  privileges 
granted  practically  inoperative  or  Incomplete.  It  is,  consequentlj^ 
obvious  that  a  presumption  resting  on  such  a  basis  as  this  must 
spring  up  in  favor  of  almost  the  entire  mass  of  commercial  and 
manufacturing  corporations,  for,  without  the  franchise  to  effect 
loans,  the  chartered  business  could  be  but  imperfectly  transacted. 
And  yet,  even  in  such  instances,  the  usual  inference  that  such  an 
implied  power  exists  may  be  repelled  by  the  language  of  the  par- 
ticular charter  or  the  i:)eculiar  circumstances  of  the  case.  In  a 
word,  the  rule  of  law  in  question  is  nothing  but  the  discovery,  by 
the  courts,  of  the  legislative  intent,  such  intent  having  been  ascer- 
tained by  a  construction  of  charters,  as  applied  to  the  subject-mat- 
ter." 

iBlackburne  Bldg.  Soc.  v.  Cunliffe,  Brooks  &  Co.,  29  Ch.  Div.  903; 
Record  &  G.  R.  Co.,  4  Ch.  Div.  748;  Davis'  Case,  L.  R.  12  Eq.  516. 


144:  INCIDENTAL   POWERS    OF   CORPORATIONS.       [§§  97,  98. 

§  97.  Test  to  determine  if  transaction  is  'borroiving. — 

In  Blackljurne  Building  Society  vi.  Ounliffe,  Brooks  &  Co., 
supra,  the  test  as  to  whether  a  given  transaction  was  a 
borrowing  or  not  was  said  to  be  this:  "Has  the  transac- 
tion really  added  to  the  liabilities  of  the  company?  If 
the  amount  of  the  company's  liabilities  remain  in  sub- 
stance unchanged,  but  there  is,  merely  for  the  convenience 
of  payment,  a  change  of  the  creditor,  there  is  no  sub- 
stantial borrowing  in  the  result,  so  far  as  relates  to  the 
position  of  the  company.  Regarded  in  that  light  it  is 
consistent  with  the  general  principles  of  equity  that  those 
who  pay  legitimate  demands,  which  they  are  bound  in  some 
way  or  other  to  meet,  and  have  had  the  benefit  of  other 
people's  money  advanced  to  them  for  that  purpose,  shall 
not  retain  that  benefit  so  as,  in  substance,  to  make  those 
other  people  pay  their  debts.  I  take  that  to  be  a  prin- 
ciple sufficiently  sound  in  equity;  and  if  the  result  is  that 
hy  the  transaction,  which  assumes  the  shape  of  an  advance 
or  loan,  nothing  is  really  added  to  the  liabilities  of  the 
company,  there  has  been  no  real  transgression  of  the  prin- 
ciple on  which  they  are  prohibited  from  borrowing." 

§  98,  Instances  as  to  imjMed  poiver  to  'borrow. —  Banks 
have  implied  power  to  borrow  money,  when  necessary 
in  the  prosecution  of  their  business,  and  may  issue  the 
usual  evidences  of  debt  therefor.^  A  railroad  company, 
under  an  authority  to  borrow  money,  has  no  right  to 
raise  money  by  the  issue  of  irredeemable  bonds  entitling 
the  holder  merely  to  a  share  of  the  earnings  after  the 
payment  of  a  certain  dividend  to  the  stockholders.^  But 
a  benefit  society  has  no  power  to  borrow  money  unless 

1  Curtis  V.  Leavitt,  15  N.  Y.  9;  Barnes  v.  Ontario  Bank,  19  N.  Y. 
152;  Bank  of  Australasia  v.  Breilat,  6  Moore's  P.  C.  152,  19i;  Magee 
V.  Mokelumne,  etc.  Co.,  5  Cal.  258. 

2  Taylor  v.  Philadelphia,  etc.  R.  Co.,  7  Fed.  Rep.  386. 


§  98.]  INCroENTAL   POWERS    OF   CORPORATIONS.  145 

its  rules  specifically  authorize  it  to  do  so.  The  directors 
of  a  benefit  building  society,  the  rules  of  which  gave  no 
power  to  borrow  money,  borrowed  a  sum  of  money  for 
the  purpose  of  advancing  it  to  their  members  on  the  se- 
curity of  their  shares.  The  lender  of  the  money  after- 
wards presented  a  petition  for  an  order  to  wind  up  the 
company.  It  was  held  by  the  court  that  the  transaction 
Avas  ultra  vires  and  that  the  petitioner  had  no  legal  or 
equitable  debt  against  the  company,  and  the  petition  was 
dismissed.^  AVhere  a  mining  company,  among  others, 
had  the  power  to  "  enter  into  any  obligation  or  contract 
essential  to  the  transaction  of  its  ordinary  affairs,  or  for 
the  purposes  for  which  it  was  created,"  it  was  held  that 
the  board  had  authority  not  only  to  designate  the  bank- 
ing institution  in  which  the  money  of  the  company  should 
be  deposited,  but  to  prescribe  the  mode  in  which,  and  the 
officers  by  whom,  it  should  be  withdrawn,  from  time  to 
time,  for  the  use  of  the  company ;  that  it  was  equally 
clear  that  the  board  had,  as  incident  to  the  general  pow- 
ers conferred  by  law  upon  the  company,  power  to  bor- 
row money  for  the  purposes  of  the  corporation,  and  to 
invest  certain  ofiicers  with  authority  to  negotiate  loans, 
to  execute  notes,  and  to  sign  checks  against  its  bank  ac- 
count.^ So  a  corporation  created  for  the  purpose  of  con- 
structing a  road  has  the  power  to  borrow  money  as  one 
of  the  implied  means  necessary  to  carry  into  effect  the 
specified  powers;  and  this  is  so  though  the  charter  di- 
rects that  the  funds  shall  be  raised  by  subscription.* 
Though  there  be  no  express  power  given  to  a  corpora- 
tion in  its  charter  to  borrow  money  on  mortgage,  but 

lEx  parte  Williamson,  L.  R  5  Ch.  309;  Laing  v.  Reed,  L.  R.  5 
Ch.  4. 

2  Mining  Co.  v.  Anglo-California  Bank,  104  U.  S.  193. 

3  Union  Bank  v.  Jacobs,  6  Humph.  (Tenn.)  515. 

10 


146  INCIDENTAL   POWERS    OF    CORPORATIONS.  [§  99. 

power  is  conferred  on  the  directors  to  make  all  necessary 
contracts,  and  to  sell  or  otherwise  dispose  of  any  portion 
of  its  property,  whenever  in  their  judgment  it  shall  bo 
found  to  the  interest  of  the  company,  the  exercise  of  the 
power  to  borrow,  and  to  secure  the  loan  by  mortgage 
from  the  company,  has  been  held  valid.^  So  the  raising 
money  by  debentures  in  the  case  of  a  trading  company 
simply  established  for  the  conveyance  of  passengers  and 
luggage  by  omnibuses  was  held  within  the  powers  of  the 
company,  although  there  was  no  express  authority  con- 
ferred either  by  the  memorandum  or  articles  of  associa- 
tion for  borrowing.-  And  a  shipping  company  without 
any  express  powers  in  the  memorandum  or  articles  of 
association  has  power  to  borrow  money  for  the  purposes 
of  the  company .=* 

§  99.  Power  to  loan  money. —  A  corporation  has  no 
power  to  loan  money  unless  there  is  a  special  clause  to 
that  eflFect  in  its  charter.  The  rule  is  declared  to  be  that 
if  the  means  employed  are  necessarily  adapted  to  the  ends 
for  which  the  corporation  was  created,  they  come  within 
the  implied  or  incidental  powers,  though  they  may  not 
be  specifically  designated  by  the  act  of  incorporation.* 
So  where  a  corporation  had  no  express  grant  of  power 
to  lend  money,  no  such  power  could  be  implied  from  the 
declared  purposes  and  objects  for  which  the  charter  was 
granted ;  on  the  contrary,  such  power  was  held  to  be  ex- 
cluded by  the  declaration  that  the  corporation  was  not 
created  for  pecuniary  profit.^     So,  also,  it  has  been  held 

1  Booth  V.  Robinson,  55  Md.  419. 

2  Byron  v.  Metropolitan  Co..  3  De  G.  &  J.  123. 

3  Australian  Steam  Clipper  Co.  v.  Mounsey,  4  K.  &  J.  733, 

4  Madison  Plank  Road  Co.  v.  Watertown  R.  Co.,  5  Wis.  173;  Cham- 
bers V.  Falkner,  65  Ala.  448;  Workingmen's  Banking  Co.  v.  Routen- 
berg,  103  111.  4G0;  s.  c,  43  Am.  Rep.  26. 

*  Chambers  v.  Falkner,  supra. 


§  100.]  INCIDENTAL   POWERS    OF   COEPOEATIONS.  14:7 

that  where  a  director,  while  indebted  to  his  bank  for  an 
amount  greater  than  seventy-five  per  cent,  of  the  stock 
held  by  him,  obtained  a  loan  for  a  further  amount,  giving 
his  note  therefor,  guarantied  by  A.,  when  the  charter  of 
the  bank  prohibited  its  lending  to  a  director  more  than 
seventy-five  per  cent,  of  the  amount  of  his  stock,  the  note 
was  void,  and  could  be  enforced  neither  against  the  di- 
rector nor  against  the  guarantor.^ 

§  100.  Powers  as  to  negotiable  instruments. —  It  is  now 
the  well-established  rule  that  corporations  authorized  gen- 
erally to  engage  in  a  particular  business  have,  as  an  inci- 
dent to  such  authority,  the  power  to  contract  debts  in 
the  legitimate  transactions  of  such  business,  unless  they 
are  restrained  by  their  charters  from  so  doing.^  It  is 
likewise  an  equally  acknowledged  rule,  that  the  right  to 
contract  debts  carries  with  it  the  power  to  give  nego- 
tiable notes  or  bills  in  payment  or  security  for  such  debts, 
unless  the  corporations  are  in  like  manner  prohibited. 
It  may  therefore  be  laid  down  as  a  general  rule,  that  a 
corporation  not  prohibited  by  law  from  so  doing,  and 
without  any  express  power  in  its  charter  for  that  pur- 
pose, may  make  a  negotiable  promissory  note,  payable 
either  at  a  future  day  or  on  demand,  when  such  note  is 
given  for  any  of  the  legitimate  purposes  for  which  the 
company  was  incorporated.^     And  it  has  been  repeatedly 

1  Workingmen's  Banking  Co.  v.  Routenberg,  supra. 

2  See  cases  cited  to  ^  96^ 

3  Moss  V.  Averell,  10  N.  Y.  449:  Rockwell  v.  Elkhorn  Bank,  13  Wis. 
653;  Barker  v.  Mechanics'  Ins.  Co.,  3  Wend.  (N.  Y.)  94;  Moss  v.  Oak- 
ley, 2  Hill  (N.  Y.),  265;  Saflford  v.  Wyckoff,  4  Hill  (N.  Y.),  442;  White- 
water Valley  Co.  v.  Vallette,  21  How.  (N.  Y.)  414;  Partridge  v.  Badger, 
25  Barb.  (N.  Y.)  146;  Barry  v.  Merchants'  Exchange,  1  Sandf.  Ch. 
(N.  Y.)  280;  Burr  v.  Glass  Co.,  14  Barb.  (N.  Y.)  358;  United  States 
Bank  v.  Hoth,  4  B.  Mon.  (Ky.)  423;  State  v.  Bank  of  Maryland,  6  G. 
&  J.  (Md.)  205;  Pierce  v.  Emery,  32  N.  H.  484;  Conn.  Mut.  Ins.  Co.  v. 


148  INCIDENTAL   POWERS    OF   COKrOKATIONS.  [§  100. 

held  that  a  law  forbidding  certain  corporations  from  issu- 
ing commercial  paper  as  a  circulating  medium,  or  from 
dealing  in  commercial  paper,  will  not  be  construed  as 
prohibiting  such  corporations  from  issuing  and  receiving 
such  commercial  paper  in  the  course  of  their  ordinary 
business.^ 

Cleveland  R.  Co.,  41  Barb.  (N.  Y.)  9;  Monument  Nat.  Bank  v.  Globe 
Works.  101  Mass.  57:  Fay  v.  Noble,  12  Cush.  (Mass.)  1;  Narragansett 
Bank  v.  Silk  Co.,  3  Met.  (Mass.)  282;  Smith  v.  Flour  Co.,  6  Cal.  1; 
Union  Bank  v.  Jacobs,  6  Humpli.  (Tenn.)  515;  Richmond,  etc.  R.  Co. 
V.  Snead,  19  Grat.  (Va.)  854;  Oxford  Iron  Co.  v.  Spradley,  46  Ala.  98; 
Caine  v.  Brigham,39  Me.  35;  Lucas  v.  Pitney,  27  N.J.  L.  221;  Clarke 
V,  School  District,  3  R.  I.  199;  Ward  v.  Johnson,  95  111,  215;  Olcott 
V.  Tioga  R.  Co.,  40  Barb.  (N.  Y.)  179;  s.  c,  27  N.  Y.  546;  Clark  v.  Farm- 
ers' Mfg.  Co.,  15  Wend.  (N.  Y.)  256;  Mead  v.  Keeler,  24  Barb.  (N.  Y.) 
20;  Mechanics'  Ass'n  v.  Lead  Co.,  35  N.  Y.  505;  Munn  v.  Commission 
Co.,  15  Johns.  (N.  Y.)  44;  Auerbach  v.  Mill  Co..  28  Minn.  291;  Ham. 
ilton  V.  Railroad  Co.,  9  Ind.  359;  McMasters  v.  Reed,  1  Grant  Cas.  (Pa.) 
36;  Hardy  v.  Merriweather,  14  Ind.  203;  Buckley  v.  Briggs,  30  Mo. 
452;  Commercial  Bank  v.  Newport  Mfg.  Co.,  1  B.  Mon.  (Ky.)  13;  Ridg- 
way  V.  Farmers'  Bank,  12  S.  &  R.  (Pa.)  256;  Butts  v,  Cuthberson,  6 
Ga.  166;  Richards  v.  Merrimac,  etc.  R.  Co.,  44  N.  H.  127;  Harvey  v. 
Chase,  38  N.  H.  278;  Montague  v.  School  District,  34  N.  J.  L.  218; 
Curtis  V.  Leavitt,  15  N.  Y.  9;  McCullough  v.  Moss,  5  Denio  (N.  Y.), 
567;  Donnelly  V.  Church,  26  La.  Ann.  738;  Brode  v.  Firemen's  Ins. 
Co.,  8  Rob.  (La.)  244:  Magee  v.  Mokelumne,  etc.  Co.,  5  Cal.  258; 
Ketch  um  v.  Buffalo,  14  N.  Y.  356;  Savage  v.  Ball,  17  N.  J.  Eq.  142; 
Milliard  v.  St.  Francis,  etc.  Academy,  8  111.  App.  341 ;  Hascall  v.  Life 
Ass'n,  5  Hun  (N.  Y.),  151;  Louisville,  etc.  R.  Co.  v.  Caldwell,  98  Ind. 
245;  Talladega  Ins.  Co.  v.  Peacock,  67  Ala.  253;  Sullivan  v.  Murphy, 
23  Mmn.  6;  Attorney-General  v.  Insurance  Co.,  9  Paige  (N.  Y.),  470; 
Mott  v.  Hicks,  1  Cow.  (N.  Y.),513:  Kelley  v.  Brooklyn,  4  Hill  (N.  Y.), 
263;  Police  Jury  v.  Britton,  15  Wall.  (U.  S.)  566;  Watts'  Appeal,  78 
Pa.  St.  370:  Comm,  v.  Pittsburg,  41  Pa.  St.  278. 

1  Blair  v.  Insurance  Co.,  10  Mo.  561;  Buckley  v.  Briggs,  30  Mo.  452; 
Western  Cottage  Co.  v.  Reddish,  51  Iowa,  55;  Smith  v.  Eureka  Flour 
Mills,  6  Cal.  1;  Attorney-General  v.  Insurance  Co.,  9  Paige  (N.  Y.), 
470;  Partridge  v.  Badger,  25  Barb.  (N.  Y.)  146;  White's  Bank  v.  To- 
ledo Ins.  Co..  12  Ohio  St.  601;  Mumford  v.  Insurance  Co.,  4  N.  Y.  463; 
Potter  v.  Bank,  28  N.  Y.  641. 


§§   101-103.]       INCIDENTAL   POWERS    OF   CORPORATIONS.         149 

§  101.  Power  of  corporation  as  indorsee. —  Whenever 
a  corporation  exceeds  its  ])o\vers  in  taking  commercial 
paper  as  payee  or  indorsee,  the  parties  liable  on  the  paper 
cannot  take  advantage  of  that  fact  as  a  defense  to  the 
action  on  the  paper  by  the  corporation ;  for,  having  made 
the  paper  payable  to  the  corporation,  and  received  its 
funds  as  a  consideration  therefor,  the  maker,  drawer,  ac- 
ceptor or  indorser,  as  the  case  might  be,  is  estopped  from 
denying  the  capacity  of  the  corporation  to  take  the  paper.^ 

§  102.  Power  of  savings  hank  to  make  negotUible  imper. 
A  savings  bank  incorporated  by  special  charter  has  the 
implied  power,  inherent  in  corporations  created  for  busi- 
ness purposes,  of  borrowing  money  required  in  the  course 
of  its  business,  and  of  making  negotiable  paper  or  a 
pledge  of  its  securities  as  a  means  of  borrowing ;  and  a 
purchaser  of  such  paper  before  maturity  from  a  third 
person,  in  whose  hands  it  is  apparently  as  business  paper, 
has  a  right  to  act  on  the  assumption  that  it  was  made 
for  a  purpose  which  gives  validity  to  the  paper  and  to 
the  pledge  of  securities  therewith.^ 

§  103.  Power  to  discount  does  not  include  power  to  pur- 
cliase. —  A  bank  empowered  to  discount  negotiable  notes, 
it  has  been  held,  has  no  power  to  purchase  such  notes.^    In 

iTied.  Com.  Paper,  §  118;  Farmers,'  etc.  Co.  v.  Needles,  53  Mo.  17; 
National  Ins.  Co.  v.  Bowman,  GO  Mo.  252;  St.  Louis  v.  Shields,  63 
Mo.  247;  Stoutimore  v.  Clark.  70  Mo.  471;  John  v.  Farmers'  Bank,  3 
Blackf.  (Ind.)  367;  Snyder  v.  Studebaker,  19  Ind.  463;  Ray  v.  Indian- 
apolis Ins.  Co.,  39  Ind.  390;  Greiner  v.  Ulery,  20  Iowa,  266;  Massey 
V.  Building  Ass'n,  33  Kan.  634. 

2 1'ifth  Ward  Sav.  Bank  v.  First  Nat.  Bank,  48  N.  J.  L.  513,  and 
cases  cited. 

3  Bank  of  Augusta  v.  Earle,  13  Pet.  (U.  S.)  519:  Farmers'  &  Mer- 
chants' Bank  v.  Baldwin,  33  Minn.  198;  First  Nat.  Bank  v.  Pierson, 
24  Minn.  140;  s.  c,  16  Alb.  Law  Jour.  319;  Niagara  County  Bank  v. 
Baker,  15  Ohio  St.  68. 


150  INCIDENTAL   POWERS    OF   CORPORATIONS.  [§  103. 

Farmer^  &  Merchant^  Barik  v.  Baldwin,  supra,  the  bank 
was  authorized  "to  carry  on  the  business  of  banking  by 
discounting  bills,  notes  and  other  evidences  of  debt,  by  re- 
ceiving deposits,  by  buying  and  selling  gold  and  silver  bull- 
ion, foreign  coin  and  foreign  and  inland  bills  of  exchange, 
by  loaning  money  on  real  and  personal  security,  and  by 
exercising  such  incidental  powers  as  may  be  necessary  to 
carry  on  such  business."  In  a  suit  by  the  bank  upon  a 
promissory  note,  the  defense  was  that  the  bank  had  no 
title  to  the  note,  since  it  had  purchased  it  outright  in- 
stead of  discounting  'it.  It  was  held  by  the  court  that 
the  bank  had  no  capacity  to  purchase  promissory  notes, 
and  the  attempted  act  of  purchase  was  tiltra  vires  and 
conferred  no  right  whatever.  The  court  distinguish  be- 
tween purchasing  and  discounting  and  say:  "The  power 
to  carry  on  the  business  of  banking,  by  discounting  notes, 
bills  and  other  evidences  of  debt,  is  only  an  authority  to 
loan  money  thereon,  with  the  right  to  deduct  the  legal 
rate  of  interest  in  advance.  This  right  can  be  fully  en- 
joyed with  the  possession  of  the  unrestricted  power  of 
buying  and  dealing  in  such  securities  as  choses  in  action 
and  personal  property.  Though,  as  is  urged  by  the 
plaintiff,  the  bank  acquires  a  title  to  discounted  paper, 
and  hence  may,  in  a  certain  sense,  be  said  to  have  pur- 
chased it,  yet  it  is  a  purchase  by  discount  —  which  is  per- 
mitted,—  and  does  not  involve  the  exercise  of  a  power  of 
purchase  in  any  other  way  than  by  discount."  The  term 
"  discounting  "  has,  however,  in  other  cases,  been  held  to 
include  purchase  as  well  as  loan,  and  the  purchase  of  ne- 
gotiable paper  by  a  bank  empowered  to  discount  notes 
has  been  sustained.^ 

1  Pope  V.  Capitol  Bank  of  Topeka,  20  Kan.  440;  Smith  v.  Exchange 
Bank,  26  Ohio  St.  141;  Fleckner  v.  Bank  of  United  States,  8  Wheat. 
(U.  S.)  338. 


§§  104,  105.]       INCIDENTAL   POWERS    OF    CORPORATIONS.  151 

§104.  LiaMJity  on  accommodation  imper. —  The  note 
of  a  corporation  in  the  hands  of  a  holder  in  good  faith, 
for  vahie,  who  took  it  before  maturity  and  without 
knowledge  that  the  maker  had  not  received  full  consider- 
ation, can  be  enforced  against  the  corporation,  although 
it  was  made  as  an  accommodation  note.^  ISTotice  which 
would  put  a  prudent  man  on  inquiry,  and  lead  to  discov- 
ery of  fraud,  will  not  vitiate  the  corporation's  negotiable 
paper.2 

§105.  Power  to 'pledge  securities. —  Where  a  corpora- 
tion has  power  to  contract  a  debt,  it  may  lawfully  pledge 
its  securities  for  its  payment.*  Accordingly,  a  corpora- 
tion may  pledge  its  bonds  and  stock  issued  by  itself  for 
its  own  debts.*  In  Zeo  v.  Union  PaGifio  R.  Co.,  supra, 
the  court  say :  "  The  purpose  to  raise  money  to  meet 
debts  or  for  other  corporate  uses,  by  pledge  of  these 
securities,  seems  to  be  clearly  within  the  scope  of  the  cor- 
porate powers,  and  lawful  and  proper.  The  corporation 
has  these  securities  not  yet  due.  ...  It  owes  debts, 
and  was  created  with  the  expectation  that  it  would  owe 
them,  and  has  implied  power  to  raise  money  to  pay  them. 
It  is  not  disputed  that  it  could  sell  these  securities  to  raise 
money  to  pay  its  debts,  and  the  power  to  pledge  them  is 
included  fairly  in  the  power  to  sell  for  the  same  pur- 
pose." 

1  Monument  National  Bank  v.  Globe  Works,  101  Mass.  57;  Web- 
ster V.  Howe  Machine  Co.,  54  Conn.  394;  National  Bank  of  Republic 
V.  Young,  41  N.  J.  Eq.  531. 

2 National  Bank  v.  Young,  7  Atl.  Rep.  488;  Webster  v.  Howe  Ma- 
chine Co.,  8  Atl.  Rep.  483;  54  Conn.  394 

3  Leo  V.  Union  Pac.  R.  Co.,  17  Fed.  Rep.  273;  Piatt  v.  Union  Pac. 
R.  Co.,  99  U.  S.  48. 

4 Combination  Trust  Co.  v.  Weed,  3  Fed.  Rep.  24;  Mor.  Corp.,  §  849; 
Lehman  v.  Tallasse  Mfg.  Co.,  64  Ala.  567;  Androscoggin  R  Co.  v. 
Auburn  Bank,  48  Me.  335;  Duncomb  v.  N.  Y.  etc.  R.  Co.,  84  N.  Y. 
190;  Chouteau  v.  Allen,  70  Mo.  290. 


CHAPTEE  VIII. 

POWEES  AND  LIABILITIES  AS  TO  CAPITAL  STOCK. 

§  106.  Introductory  —  Nature  and  purpose  of  capital  stock. 

107.  Capital  stock  as  a  trust  fund. 

108.  Limitation  on  doctrine  tliat  capital  stock  a  trust  fund. 

109.  Power  to  increase  capital  stock. 

110.  Consent  of  stockholders  necessary  to  increase  capital  stock, 

111.  Power  of  national  bank  to  increase  capital  stock. 

112.  Irregularity  in  exercising  power  as  affecting  stockholders. 

113.  Power  to  reduce  capital  stock. 

114.  Reduction  of  capital  stock  in  England. 

115.  Power  to  issue  new  stock. 

116.  Powers  as  to  special  stock. 

117.  Power  to  issue  shares  at  discount. 

118.  Power  to  issue  preferred  stock. 

119.  Liability  on  ultra  vires  issue  of  preferred  stock. 

120.  Power  to  deal  in  own  stock. 

121.  Power  to  purchase  stock  of  other  corporations. 

122.  Instances  where  power  denied. 

123.  Power  of  foreign  corporation  to  purchase  stock  of  domestic 

comimny. 

124.  Power  to  declare  dividends. 

125.  Power  to  pledge  future  calls. 

126.  Liability  on  dividends  declared. 

127.  Liability  on  illegal  issue  of  stock. 

§106.  Introductory — Nature  and  purpose  of  capital 
stoclc. —  The  capital  stock  of  a  corporation  has  been  de- 
fined to  be  the  aggregate  amount  of  the  funds  of  a  corpo- 
ration, which  are  combined  together  under  a  charter,  for 
the  attainment  of  some  common  object  of  public  conven- 
ience or  private  utility.^     This  amount  is  usually  fixed  in 

1  Barry  v.  Merchants  Exch..  1  Sandf.  Ch.  305;  Hightower  v.  Thorn- 
ton, 8  Ga.  486;  Webster  v.  Upton,  91  U.  S.  65;  Chubb  v.  Upton,  5 


§  107.]  CAPITAL   STOCK.  153 

the  charter  or  articles  of  incorporation,  and  a  limit  placed 
on  its  increase  b}'"  statutory  enactment.  This  limit  is 
fixed  in  deference  to  the  convenience,  information  and 
security  of  the  public  at  large,  as  well  as  to  the  conven- 
ience of  the  intended  corporation.  To  the  corporators  it 
prescribes  the  amount  and  subdivisions  of  their  respective 
contributions  to  the  common  fund,  the  voice  which  each 
shall  have  in  its  control  and  management,  and  the  appor- 
tionment of  the  profits  of  the  enterprise.  To  the  com- 
munity it  announces  the  extent  of  the  means  contributed 
and  forming  the  basis  of  the  dealings  of  the  corporate 
body,  and  enables  every  man  to  judge  of  its  ability  to 
meet  its  engagements  and  perform  what  it  undertakes. 
And  when  the  statute  requires  the  stock  to  be  paid  in  be- 
fore the  corporation  can  transact  business,  security  to 
those  contracting  with  it  is  thereby  superadded  to  the  in- 
formation of  its  resources.^ 

§  107.  Ccqntal  stoch  as  a  trust  fund. — The  capital  stock 
of  an  incorporated  company  is  also  said  to  be  a  trust 
fund  set  apart  for  the  payment  of  its  debts ;  that  it  is  a 
substitute  for  the  personal  liability  which  subsists  in  pri- 
vate copartnerships;  that  when  debts  are  incurred,  a 
contract  arises  with  the  creditors  that  it  shall  not  be  with- 
drawn or  applied  otherwise  than  upon  their  demands, 
until  such  demands  are  satisfied ;  that  the  creditors  have 
a  lien  upon  it  in  equity,  and,  if  diverted,  they  may  follow 
it  as  far  as  it  can  be  traced  and  subject  it  to  the  payment 
of  their  claims,  except  as  against  holders  who  have  taken 
it  bona  fide  for  a  valuable  consideration  and  without  no- 
tice; and  that  it  is  publicly  pledged  to  those  who  deal 

Otto  (U.  S.),  665;  Eaton  v.  Aspinwall,  19  N.  Y.  119;  Aspinwall  v.  Sac- 
chi,  57  N.  Y.  331;  Kent  v.  Quicksilver,  etc.  Co.,  78  N.  Y.  159;  Sheldon 
Co.  V.  Eickemeyer  Co.,  90  N.  Y.  G13. 
1  See  cases  cited  in  preceding  section. 


154:  CAPITAL    STOCK.  [§  107. 

with  the  corporation  for  their  security.^  "Unpaid  stock 
is  as  much  a  part  of  this  pledge  and  as  much  a  part  of 
the  assets  of  the  company  as  the  cash  which  has  been 
paid  in  upon  it.  Creditors  have  the  same  right  to  insist 
upon  its  payment  as  upon  the  payment  of  any  other  debt 
due  to  the  company.  And,  as  regards  creditors,  there  is 
no  distinction  between  such  a  demand  and  any  other 
asset  which  may  form  a  ])art  of  the  property  and  effects 
of  the  corporation."  ^  These  objects  for  the  public  benefit 
are  sometimes  defeated  by  fraud  and  deception,  but  they 
are  such  as  the  les'islature  have  in  view  in  limiting  the 
amount  of  capital  stock  and  requiring  a  specified  sum  or 
proportion  to  be  paid  in.  As  was  said  in  Handley  v. 
Stutz,  supra:  "  The  stock  of  a  corporation  is  supposed  to 
stand  in  the  place  of  actual  property  of  substantial  value, 
and  as  being  a  convenient  method  of  representing  the  in- 
terest of  each  stockholder  in  such  property,  and  to  the 
extent  to  which  it  fails  to  represent  such  value  it  is  either 
a,  deception  and  fraud  upon  the  public  or  an  evidence 
that  the  original  value  of  the  corporate  property  has  be- 
come depreciated.  The  market  value  of  such  shares  rises 
Avith  an  increase  in  the  value  of  the  corporate  assets,  and 
falls  in  the  case  of  loss  or  misfortune,  whereby  the  value 
of  such  assets  is  impaired.  And  the  increase  of  value  of 
such  stock  is  taken  to  represent  either  an  appreciation  in 
value  of  the  company's  property  beyond  the  par  value 
of  original  shares,  or  so  much  money  paid  to  the  corpora- 
tion as  is  represented  by  such  shares.     The  law  implies  a 

1  Sanger  v.  Upton,  91  U.  S.  60;  Curran  v.  Arkansas,  15  How.  (U.  S.) 
304;  Wood  v.  Dunimer,  3  Mason  (U.  S.),  308;  Slee  v.  Bloom,  19  Johns. 
(N.  Y.)  456;  Briggs  v.  Penniman,  8  Cow.  (N.  Y.)  387;  Society,  etc.  v. 
Abbott,  2  Beav.  559;  Walworth  v.  Holt,  4  Myl.  &  C.  789;  Ward  v. 
Griswoldville  Co.,  16  Conn.  593;  Fowler  v.  Robinson,  31  Me.  189; 
Handley  v.  Stutz,  139  U.  S.  417. 

2  Sanger  v.  Upton,  supra. 


§  108.]  CAPITAL    STOCK.  155 

promise  by  the  original  subscribers  of  stock  who  did  not 
pay  for  it  in  money  or  other  property  to  pay  for  the 
same  when  called  upon  by  creditors,  and  a  contract  be- 
tween themselves  and  the  corporation  that  the  stock  shall 
be  treated  as  fully  paid  and  non-assessable,  or  otherwise 
limiting  their  liability  therefor,  is  void  as  against  credit- 
ors." 

§  108.  Limitation  on  doctrine  that  capital  stock  is  trust 
fund. —  The  general  proposition  that  the  capital  stock  of  a 
corporation  is  a  trust  fund  for  the  benetit  of  creditors  can- 
not with  reason  be  controverted  or  denied,  but  this  theory 
applies  only  to  corporations  after  they  have  become  insolv- 
ent. Prior  to  its  insolvency,  and  while  the  corporation  is 
still  a  going  concern,  it  holds  its  property  as  absolutely 
and  with  as  great  a  power  of  dominion  and  control  as 
any  other  person  exercises  over  his  individual  possessions.^ 
^'But  when  a  corporation  becomes  insolvent,  then,  ac- 
cording to  the  holding  of  courts  of  equity,  its  property 
becomes  a  trust  fund  for  the  payment  of  creditors.  The 
trust  embraces  all  the  property  of  a  corporation ;  embraces 
its  real  estate  and  choses  in  ax^tion.  If  debts  are  due  to 
the  corporation  they  are  part  of  that  fund,  and  may  be 
collected  by  the  ]5roper  representatives  of  the  corporation, 
whether  a  trustee  appointed  by  a  court  of  equit}^,  an  as- 
signee in  bankruptcy,  or  other  agent,  for  the  parties  in- 
terested. But  it  is  only  those  claims  or  assets  which  a 
compan}'  has  that  belong  to  the  trust  fund.  Unpaid  in- 
stalments on  stock  in  the  ordinary  case  are  as^ts;  they 
are  claims  which  a  company  could  enforce,  and\herefore 
they  are  claims  which  the  creditors  can  compel  the  en- 

1  Coit  V.  North  Carolina  Gold  Co.,  14  Fed.  Rep.  13;  Sawyer  v.  Hoag, 
17  Wall.  (U.  S.)  610;  Tuckerman  v.  Brown,  33  N.  Y.  297;  Ogilvie  v. 
Knox  Ins.  Co.,  33  How.  (U.  S.)  380;  Osgood  v.  Laytin,  3  Keyes  (N.  Y.), 
531;  37  How.  Prac.  63,  affirming  48  Barb.  463. 


156  CAPITAL    STOCK.  [§  109. 

forcement  of  through  the  instrumentality  of  a  court  of 
equity." ' 

§  109.  Power  to  increase  eaintnl  stock. —  As  a  general 
rule,  corporations  are  not  invested  with  the  power  or  au- 
thority to  increase  or  diminish  their  capital  stock.  But 
this  power  is  sometimes  conferred,  with  express  limita- 
tions, by  some  of  the  states  in  the  general  law  under 
Avhich  they  are  organized  and  created ;  otherwise  a])plica- 
tion  must  be  made  to  the  legislature  for  such  authority, 
and  every  application  for  such  an  increase  or  diminution 
of  their  capital  stock  is  regarded  as  equivalent  to  a  request 
for  an  amendment  of  their  charter  powers  in  that  respect, 
and  all  attempts  on  their  part  to  effect  such  increase  with- 
out the  sanction  or  approval  of  the  sovereign  are  desti- 
tute of  authority  and  wholly  wanting  in  legal  validity.'^ 
The  implied  or  incidental  powers  corporations  may  right- 
fully exercise  never  have  been  extended  to  changes  of  the 
purpose  for  which  a  corporation  was  created.  And  it  has 
been  held  changes  of  the  capital  stock  of  corporations  in- 
volve changes  in  organization,  and  a  displacement  of  the 
power  and  influence  of  the  original  stockholders,  or  their 
legitimate  successors,  who  are  of  right  entitled  to  exer- 
cise the  privilege  of  electing  officers  and  have  general 
management  of  the  corporate  affairs  and  business.*  The 
general  power  to  perform  all  corporate  acts  refers  to  the 
ordinary  business  transactions  of  the  corporation,  and  does 
not  extend  to  a  reconstruction  of  the  body  itself  or  to  an 

1  Mr.  Justice  Bradley  in  Coit  v.  North  Carolina  Gold  Co.,  14  Fed. 
Rep.  13. 

2  Grangers',  etc.  Ins.  Co.  v.  Kamper,  73  Ala.  325;  Green's  Brice's 
Ultra  Vires,  g  112;  Thompson,  Liab.  Stock,  §  115;  Latlirop  v.  Knee- 
land,  46  Barb.  (N.  Y.)  432;  Mutual  Life  Ins.  Co.  v.  McEhvay,  12  N.  J. 
Eq.  133;  New  York,  etc.  R.  Co.  v.  Schuyler,  34  N.  Y.  30;  Railway 
Co.  V.  Allerton,  18  Wall.  (U.  S.)  233;  Scovill  v.  Thayer,  105  U.  S.  143. 

*  Cases  cited  in  preceding  note. 


§  110.]  CAriTAL    STOCK.  157 

enlargement  of  its  capital  stock.  A  corporation,  like  a 
partnership,  it  bas  been  stated,  is  an  association  of  natural 
persons  who  contribute  a  joint  capital  for  a  common  pur- 
pose, and,  although  the  shares  may  be  assigned  to  new 
individuals  in  perpetual  succession,  yet  the  number  of 
shares  and  the  amount  of  capital  stock  cannot  be  in- 
creased except  in  the  manner  authorized  b}'^  the  charter 
or  the  general  law  regulating  such  procedure.^  So  where 
ii  corporation,  formed  under  a  general  law,  of  its  own  act, 
without  legislative  consent,  attempted  to  increase  its  cap- 
ital stock,  it  was  held  that  such  attempt  to  increase  the 
capital  stock  of  the  company  beyond  the  limit  fixed  by 
the  charter  was  xiltra  vires,  and  the  stock  itself  therefore 
void,  and  conferred  on  the  holders  no  rights  and  subjected 
them  to  no  liabilities.^ 

§  110.  Consent  ofstocl'liolders  necessary  to  increase  cap- 
ital stocTi. —  Authority  to  increase  the  capital  stock  of  a 
corporation  may  be  conferred  by  a  law  passed  subsequent 
to  the  grant  of  a  charter;  but  such  a  law  should  regularly 
be  accepted  by  the  stockholders,  and  such  assent  may  be 
inferred  by  subsequent  acquiescence;  but  in  some  form  or 
other  it  must  be  given  to  render  the  increase  valid  and 
binding  on  them.'     And  it  has  been  held  that  an  increase 

1  Railway  Co.  v.  Allerton,  sujjra. 

2  Railway  Co.  v.  Allerton,  18  Wall.  (U.  S.)  233.  And  see  generally, 
Scovill  V.  Thayer,  105  U.  S.  143;  Knowlton  v.  Congress,  etc.  Co.,  14 
Blatch.  (U.  S.)  364;  Grangers',  etc.  Ins.  Co.  v.  Kamper,  73  Ala.  325; 
Moses  V.  Ocoee  Bank,  1  Lea  (Tenn.),  398;  Ferris  v.  Ludlow,  7  Ind. 
517;  In  re  Ebbw.  Vale,  etc.  Co.,  4  Ch.  Div.  827;  Droitwich,  etc.  Co.  v, 
Curzon,  L.  R.  3  Exch.  35,  42;  Stace  &  Worth's  Case,  L.  R.  4  Ch. 
682;  Salem  Mill  Dam  Co.  v.  Ropes,  6  Pick.  23;  New  York,  etc.  R.  Co. 
V.  Schuyler,  34  N.  Y.  30:  Sutherland  v.  Olcott,  95  N.  Y.  93,  100;  Me- 
chanics' Bank  v.  New  York,  etc.  R.  Co.,  13  N.  Y.  599:  Lathrop  v. 
Kneeland,  46  Barb.  (N.  Y.)  432;  Handley  v.  Stutz,  139  U.  S.  417: 
Winters  v.  Armstrong,  37  Fed.  Rep.  508. 

3  Rail  way  Co.  v.  Allerton,  supra;  Eidman  v.  Bowman,  58  111.  444; 


158  CAPITAL    STOCK,  [§  111. 

ia  the  capital  stock  of  a  corporation,  if  made  with  consent 
of  all  the  stockholders,  is  binding,  although  not  made 
with  all  the  statutory  formalities.^ 

§  111.  Foiver  of  national  hanlcs  to  increase  capital  stocli. 

In  Winters  v.  Armstrong^  37  Fed.  Rep.  508,  Mr.  Justice 
Jackson,  speaking  of  the  power  of  national  banking  asso- 
ciations to  increase  their  capital  stock,  said:  "National 
banking  associations  have  no  authority  of  law  by  their 
own  action  to  increase  their  capital  stock  to  any  amount 
whatever.  They  can  make  no  increase  to  any  extent 
without  the  approval  of  the  comptroller,  as  the  repre- 
sentative of  the  government.  His  approval  confers  the 
right  to  make  and  fixes  the  limit  or  amount  of  such  in- 
crease.    "Within  its  own  powers  and  by  its  own  action  a 

Payson  v.  Stoever,  2  Dill.  (U.  S.)  428;  SewelFs  Case,  L.  R.  3  Ch.  131; 
Lane's  Case,  1  De  G.,  J.  &  S.  504 

1  Poole  V.  West  Point,  etc.  Ass'n,  30  Fed.  Rep.  513. 

In  Scovill  V.  Thayer,  supra,  an  action  was  brought  by  the  as- 
signee in  bankruptcy  of  a  mining  company  against  a  stockholder  to 
recover  unpaid  assessments  upon  stock.  The  statutes  of  Kansas 
provided  that  any  corporation  might  increase  its  capital  stock  to 
any  amount  not  exceeding  double  the  amount  of  its  autlr>nzed  capi- 
tal. The  corporation  in  question  had  increased  its  capital  stock,  as 
it  was  authorized  to  do,  by  doubling  it,  thus  quadrupling  the  orig- 
inal amount,  the  defendant  in  the  case  having  attended  by  proxy 
the  meeting  at  which  such  illegal  increase  was  voted,  and  received 
a  quantity  of  the  stock  thus  issued.  It  was  held  that  such  increase 
was  ultra  vires  and  void,  and  that  the  defendant  was  not  estopped 
from  denying  the  validity  of  the  overissue,  or  his  obligation  to  pay 
for  it. 

There  has  been  some  criticism  made  relative  to  the  decision  in 
this  case  as  compared  with  that  of  Handley  v.  Stutz,  139  U.  S.  417, 
but  there  is  a  distinct  difference  between  these  two  cases;  as  in  the 
Scovill  Case  the  corporation  had  no  power,  by  statute  or  other- 
wise, to  so  increase  its  capital  stock;  while  in  the  Handley  Case  the 
power  was  conferred  by  the  General  Statutes  of  Kentucky,  and  the 
legality  of  the  stock  was  attacked  on  the  ground  of  irregularity  in 
its  issue  —  a  wide  difference  in  affecting  the  legality  of  the  issue. 


§  111.]  CAPITAL    STOCK.  159 

national  bank  can  make  no  increase  of  its  capital  stock. 
It  might  and  doubtless  would  be  true  that  with  or  after 
the  comptroller's  approval  of  an  increase,  which  involves 
the  exercise  of  discretion,  supervisor}''  on  his  part,  and 
wholly  beyond  the  control  and  independent  of  the  action 
or  wish  of  the  association  or  of  its  stockholders,  the  steps 
taken  or  mode  of  procedure  adopted  by  the  bank  might 
not  strictly  conform  to  the  requirements  of  the  law ;  that 
for  want  of  such  conformity  the  action  on  the  part  of 
the  association   might  be  illegal;    and  that  the    stock- 
holders or  subscribers  for  such  stock  who  had  accepted 
an  allotment  of  shares  thereunder,  and  acquiesced  in  the- 
steps  taken  and  the  proceedings  had  by  the  association 
in  the  preliminaries  to  be  performed  on  its  part,  would 
be  bound.     In  effecting  an  increase  of  its  capital  stock 
the  association  may,  as  far  as  relates  to  its  own  action, 
proceed   in  an   irregular   and  informal   manner,   which 
a  stockholder  who  has  acquiesced  therein  may  not,  as 
against  either  the  corporation  or  its  creditors,  take  advan- 
tage of  or  insist  upon  as  invalidating  his  subscription,  or 
the  stock  issued  to  him  thereunder.     But  in  regard  to  the 
sovereign's  consent  to  such  increase,  to  be  expressed  in 
and  by  the  approval  of  its  comptroller  of  the  currency, 
that  is  an  essential  prerequisite  or  condition  precedent, 
like  a  special  enabling  act,  in  conferring  the  power  and 
authority  to  make  the  proposed  increase  valid.     8uch  ap- 
proval involves  the  grant  of  power  to  complete  and  per- 
fect the  proceedings  commenced  by  the  association  look- 
ing to  an  increase  of  its  capital  stock.     It  is  something 
lying  beyond  the  action  or  control  of  the  association  and 
its  stockholders  seeking  to  effect  an  organic  and  funda- 
mental change  in  the  constitution  of  the  bank;  and  in 
respect  to  this  essential  thing,  in  nowise  involved  in  the 
action  or  steps  taken  by  the  association,  the  question  of 


IGO  CAPITAL    STOCK.  [§§  112,  113, 

irregularity  or  informality  in  its  own  mode  of  procedure, 
and  the  consequences  then  resulting,  do  not  apply." 

§  112.  Irregularity  in  cxercinncf  imwer  as  affecting 
stoclch  older. —  Where  the  power  to  increase  its  capital 
stock  exists,  and  is  exercised,  the  corporation's  failure  to 
perform  some  act  devolving  upon  itself  in  connection 
therewith,  such  as  recording  and  publishing  its  action, 
constitutes  an  irregularity  or  neglect  of  duty  of  which 
the  state  only  can  complain  or  take  advantage  in  a  direct 
proceeding  against  the  corporation ;  but  stockholders  who 
have  accepted  portions  of  such  increased  stock  are  es- 
topped from  denying  the  validity  of  the  increase  upon 
any  such  irregularity  or  neglect.^ 

§  113.  Power  to  reduce  capital  stoclc. —  As  a  general 
rule,  power  conferred  on  a  corporation  to  increase  its 
capital  stock  gives  it  no  power  to  diminish  the  same." 
And  where  the  constitution  and  laws  provide  for  an  in- 
crease and  are  silent  as  to  decrease  of  stock,  the  power  to 
decrease  has  been  held  intentionally  denied.^  So  if  a  cor- 
poration is  created  with  a  fund  limited  by  the  act,  it  can- 
not enlarge  or  diminish  that  fund  but  by  license  from  the 
legislature,  and  if  the  capital  stock  is  parceled  out  into  a 
fixed  number  of  shares,  this  cm  not  be  changed  by  the 
corporation."*     A  decrease  of  capital  stock  affects  injuri- 

1  Upton  V.  Tribilcock,  91  U.  S.  47;  Stutz  v.  Handley,  .41  Fed.  Rep. 
531;  s.  c,  139  U.  S.  417;  Sanger  v.  Upton.  91  U.  S.  56;  Webster  v.  Up- 
ton, 91  U.  S.  65;  Chubb  v.  Upton,  95  U.  S.  665;  Pullman  v.  Upton,  96 
U.  S.  328;  Casey  v.  Galli,  94  U.  S.  673. 

2 Salem  Mill  Dam  Co.  v.  Ropes,  6  Pick.  (Mass.)  23;  Droitwich  Pat- 
ent Salt  Co.  V.  Curzon,  L.  R.  3  Exch.  42;  In  re  Financial  Corporation. 
L.  R.  2  Ch.  App.  714;  Smith  v.  Goldworthy,  4  Ad.  &  El.  (N.  S.)  430; 
Sutherland  v.  Olcott,  95  N.  Y.  93;  In  re  Ebbw.  etc.  Co.,  4  Ch.  Div.  827. 

*Seignouret  v.  Home  Ins.  Co.,  24  Fed.  Rep.  332;  Sutherland  v.  Ol- 
cott, 95  N.  Y.  93. 

*  See  cases  cited  in  note  3. 


^§  114,  115.]  CAPITAL    STOCK.  IGl 

ously  more  parties  and  interests  than  would  an  increase. 
Creditors  and  customers  have  a  claim  to  the  preservation 
of  the  capital  stock  in  its  original  integrity,  and  a  reduc- 
tion of  the  capital  stock  is  practically  the  dissolution  of 
the  company  and  the  organization  of  a  new  one.^ 

§  114.  As  to  reduction  of  aqntal  stock  in  JEngland. — 
There  seems  to  be  a  lack  of  uniformity  in  the  English 
courts  as  to  the  reduction  of  the  capital  stock  of  a  corpo- 
ration, the  diversity  of  opinion  arising,  however,  in  exer- 
cising this  powder  relative  to  common  and  preferential 
shares;  some  cases  holding  that  it  is  not  essential  that 
the  reduction  should  be  made  equally,  or  ratably,  on  all 
the  shares,"  while  others  hold  that  the  court  has  power 
to  sanction  a  special  resolution  for  the  reduction  of  some 
onl}'"  of  the  shares  of  a  company.^  The  controversy 
which  has  been  going  on  between  Mr.  Justice  ]^orth  and 
Mr.  Justice  Kay  relative  to  this  question  had  not,  up  to  a 
late  date,  been  settled  by  the  court  of  appeals. 

§  115.  Fower  to  issue  new  stock. —  The  question  as  to 
whether  an  active  corporation  —  a  "  going  concern  " — 
may  not,  for  the  purpose  of  recuperating  itself  and  pro- 
viding new  conditions  for  the  successful  prosecution  of  its 
business,  issue  new  stock,  put  it  upon  the  market  and  sell 
it  for  the  best  price  that  can  be  obtained,  is  compar- 
atively a  new  one  in  this  country,  first  coming  before  the 
United  States  supreme  court  in  Ilandley  v.  Stuts,  139 
TJ.  S.  41 7,  in  1890.  It  was  held  in  that  case  that  a  corpo- 
ration had  such  power,  Mr.  Justice  Brow^n,  in  delivering 

1  Seignouret  v.  Home  Ins.  Co.,  supra. 

2  Re  Union  Plate  Glass  Co.,  43  Ch.  Div.  513;  In  re  Quebrada  Ry.,  40 
Ch.  Div.  363. 

3  In  re  Barrow,  etc.  Co.,  39  Ch.  Div.  582;  In  re  Catling  Gun,  Lim., 
43  Ch.  Div.  628. 

H 


162  CAPITAL    STOCK.  [§  116» 

the  opinion  of  the  court,  saying:  "To  say  that  a  corpo- 
ration may  not,  under  the  circumstances  above  indicated, 
put  its  stock  upon  the  market  and  sell  it  to  the  highest 
bidder,  is  practically  to  declare  that  a  corporation  caa 
never  increase  its  capital  by  a  sale  of  shares,  if  the  orig- 
inal stock  has  fallen  below  par.  The  wholesome  doc- 
trine, so  many  times  enforced  by  this  court,  that  the' 
capital  stock  of  an  insolvent  corporation  is  a  trust  fund 
for  the  payment  of  its  debts,  rests  upon  the  idea  that  the 
creditors  have  a  right  to  rely  upon  the  fact  that  the  sub- 
scribers to  such  stock  have  put  into  the  treasury  of  the 
corporation,  in  some  form,  the  amount  represented  by  it; 
but  it  does  not  follow  that  every  creditor  has  the  right  to 
trace  every  share  of  stock  issued  by  such  corporation, 
and  inquire  whether  its  holder,  or  the  person  from  whom 
he  purchased,  has  paid  its  par  value  for  it.  It  frequently 
happens  that  corporations,  as  well  as  individuals,  find  it 
necessary  to  increase  their  capital  in  order  to  raise  money 
to  prosecute  their  business  successfully,  and  one  of  the 
most  frequent  methods  resorted  to  is  that  of  issuing  new 
shares  of  stock  and  putting  them  upon  the  market  for 
the  best  price  that  can  be  obtained;  and  so  long  as  the 
transaction  is  hona  fide^  and  not  a  mere  covering  for 
'  waterins: '  the  stock,  and  the  consideration  obtained 
represents  the  actual  value  of  such  stock,  the  courts  have 
shown  no  disposition  to  disturb  it."  * 

§  116.  Poivers  as  to  special  stock. —  In  Massachusetts 
they  have  what  is  termed  "  special  stock,"  the  character- 

iSee  New  Albany  v.  Burke,  11  Wall.  (U.  S.)  96;  Coit  v.  Gold  Co., 
119  U.  S.  345;  Clark  v.  Bever,  139  U.  S.  96;  Fogg  v.  Blair,  id.  118; 
Morrow  v.  Nashville,  etc.  Co.,  87  Tenn.  262,  which  hold  that  the  gen- 
eral rule  that  holders  of  stock  in  favor  of  creditors  must  respond 
for  its  par  value  is  subject  to  exceptions  where  the  transaction  is 
not  a  mere  cover  for  an  illegal  increase.  See,  also,  Stein  v.  Howard, 
65  Cal.  616. 


§  117.]  CAPITAL   STOCK.  103 

istics  of  which  are  that  it  is  limited  in  amount  to  two- 
fifths  of  the  actual  capital;  it  is  subject  to  redemption  by 
the  corporation  at  par  after  a  fixed  time,  to  be  expressed 
in  the  certificates;  the  corporation  is  bound  to  pay  a 
fixed  half-yearly  sum  or  dividend  upon  it  as  a  debt ;  the 
holders  of  it  are  in  no  extent  liable  for  the  debts  of  the 
corporation  beyond  their  stock,  and  the  issue  of  special 
stock  makes  all  the  special  stockholders  liable  for  all  debts 
and  contracts  of  the  corporation  until  the  special  stock  is 
fully  redeemed.^ 

§  117.  Poiver  to  issue  shares  at  a  discoxint. —  As  a  gen- 
eral rule,  a  company  limited  by  shares  under  the  act  of 
its  creation  has  no  power  to  issue  shares  at  a  discount  so 
as  to  render  the  shareholder  liable  for  a  smaller  sum  than 
that  fixed  for  the  value  of  the  shares  by  the  charter  or 
memorandum  of  association.^     Such  an   act   would  be 

iMass.  Stat.  1855,  ch.  290;  1870,  ch.  224,  §§  25,  39,  cl.  4;  Pub.  Stat., 
ch.  106,  §§  42,  61,  cl.  3;  Williams  v.  Parker,  186  Mass.  204;  American 
Tube  Works  v.  Boston  Machine  Co.,  139  Mass.  5. 

2  In  re  Almada  &  Tirito  Co.,  38  Ch.  Div.415;  Trevor  v.  Whitworth, 
12  App.  Cas.  409;  In  re  Addlestone  Co.,  37  Ch.  Div.  191;  In  re  Wey- 
mouth Packet  Co.,  1  Ch.  Div.  66;  Tlie  Ooregum  G.  Min.Co.  v.  Roper, 
61  L.  J.  (N.  S.)  337,  66  L.  J.  (N.  S.)  427  (1892), 

The  decision  in  Handley  v,  Stutz,  supra,  has  called  forth  from  the 
legal  profession,  generally,  a  vast  deal  of  adverse  criticism.  A  posi- 
tion directly  opposite  has  been  taken  by  the  House  of  Lords  in  the 
case  of  Ooregum  Gold  Mining  Co,  v.  Roper,  supra.  The  question  in 
that  case  was  whether  it  was  or  was  not  competent  for  a  company 
limited  by  shares  to  issue  shares  at  a  discount  so  as  to  relieve  per- 
sons taking  shares  so  issued  from  liability  to  pay  up  their  amount 
in  full.  The  House  of  Lords  expressly  held  that  where  a  corporation 
puts  its  new  stock  on  the  market  and  sells  it  for  the  best  price  it  can 
get, —  in  that  case  for  double  what  the  old  stock  was  selling  for, — 
the  purchasers  are  liable  for  the  difference  between  what  they  paid 
and  the  par  value  of  the  stock,  not  only  to  the  creditors  of  the  cor- 
poration, but  also  to  the  corporation  itself. 

It  must  be  admitted  that  both  the  logic  and  the  law  would  seem 


164  CAPITAL    STOCK.  [§  118. 

idtra  vires,  and  such  issue  would  be  invalid,  although  the 
contract  with  the  shareholders  under  which  the  shares 
were  issued  had  been  registered  under  the  act  regulating 
such  transactions.  There  is  no  practical  distinction,  it 
has  been  held,  between  issuing  shares  at  a  discount  and 
returning  to  the  shareholder  a  portion  of  the  capital  to 
which  the  creditors  have  a  right  to  look  as  that  out  of 
which  they  are  to  be  paid.^ 

§  118.  Power  to  issue  preferred  stocli. —  The  question 
as  to  whether  a  corporation  has  or  has  not  power  to  issue 
shares  of  stock  to  which  a  preferential  dividend  shall  be 
attached  has  been  the  subject  of  much  legal  controversy. 
When  such  power  is  expressly  granted  in  the  charter  by 
which  the  company  is  incorporated,  then,  of  course,  there 
is  no  question  as  to  the  legality  of  the  issue.^  It  seems 
pretty  well  settled  by  the  weight  of  authority,  however, 
that  a  corporation  has  no  implied  power,  either  at  the 
time  of  its  organization  or  at  any  subsequent  time,  to 
issue  preferred  stock.  The  power  can  exist  only  when 
expressly  conferred  by  the  charter  or  by  statute.'    In 

to  be  with  the  House  of  Lords  on  this  particular  question,  and  it  is 
doubtful  whether  the  Handley  v.  Stutz  case  will  be  generally  ac- 
cepted as  a  final  disposition  of  this  important  question. 
f  1  In  re  Almada,  etc.  Co.,  38  Ch.  Div.  415;  Trevor  v.  Whitworth,  13 
App.  Cas.  409;  In  re  Addlestone  Co.,  37  Ch.  Div.  191;  In  re  Wey- 
mouth Packet  Co.,  1  Ch.  Div.  66  (1890);  Ex  parte  Maude,  L.  R.  6  Ch. 
51;  Birch  v.  Cropper,  14  App.  Cas.  525;  Ooregum  Gold  M.  Co.  v. 
Roper,  61  L.  J.  (N.  S.)  337,  66  L.  J.  (N.  S.)  427  (1892);  s.  C,  28  Am.  L, 
Rev.  861. 

2  Cook,  Stock  &  Stockholders,  §  268;  Everhardt  v.  "West  Chester 
Ry.  Co.,  28  Pa.  St.  339;  Rutland,  etc.  Ry.  v.  Thrall,  35  Vt.  536;  Tay- 
lor, Corp.,  §§  571,  573. 

3  Hutton  v.  Scarborough  Co.,  4  De  G.,  J.  &  S.  072;  Sturge  v.  Eastern, 
etc.  Ry.  Co.,  7  De  G.,  M.  &  G.  158;  Guiness  v.  Corporation  of  Ireland, 
23  Ch.  Div.  349;  Hoole  v.  Great  Western  Ry.  Co.,  L.  R.  3  Ch.  App. 
263. 


§  119.]  CAPITAL    STOCK.  1G5 

American  Tube  Woi'hs  v.  Boston  Macliine  Co.,  supra^ 
the  court  say:  "Corporations  have  sometimes,  no  doubt, 
at  the  outset  of  their  organization,  assumed  the  authority 
to  divide  their  capital  stock  into  two  classes,  preferred 
and  common ;  and  when  such  stockholder  subscribes  for 
and  takes  his  shares  of  common  stock  with  full  knowl- 
edge and  consent,  there  is  perhaps  no  legal  objection  to 
this  course.  The  question  is  a  different  one  whether  a 
corporation,  w^ith  an  existing  capital  stock  all  subscribed 
for  and  taken,  can  increase  its  capital  by  the  issue  of 
further  shares  which  shall  be  preferred,  and  if  so,  under 
what  circumstances  this  may  be  done,  and  whether  by  a 
mere  majority  or  only  by  a  unanimous  vote  of  the  exist- 
ing stockholders."  A  company  may,  however,  when  it  is 
authorized  to  issue  preferred  stock,  contract  with  the  pre- 
ferred stockholders  that  they  shall  be  entitled  to  a  pref- 
erence not  only  in  the  payment  of  dividends,  but  also  in 
the  distribution  of  the  company's  assets.^ 

§  119.  LiabiUty  on  ultra  vires  issue  of  preferred  stock. 
In  the  light  of  what  has  heretofore  been  shown  in  pre- 
ceding sections  as  to  the  power  of  corporations  to  issue 
preferred  stock,  the  general  rule  may  be  declared  to  be 
that,  if  a  corporation  issue  preference  shares  of  stock 
without  authority  so  to  do  either  in  its  charter  or  the  law 
under  which  it  is  organized,  such  issue  is  ultra  mres  and 
void,  and  no  liability  attaches  to  the  compan}''  oji  such 
stocky  but  an  action  may  be  maintained  against  the  com- 
pany to  recover  the  money  paid  for  such  illegal  issue.- 

1  In  re  Bangor  &  Slate  Co.,  L.  R.  20  Eq.  59. 

2  Anthony  v.  Household  Machine  Co.,  16  R.  I.  571.  And  see  2  Mor. 
Corp.,  §§  731,  722;  Dill  v.  Wareham,  7  Met.  (Mass.)  438;  Congress,  etc. 
Co.  V.  Knovvlton,  103  U.  S.  49;  Mayor,  etc.  v.  Ray.  19  Wall.  (U.  S.) 
468;  Oneida  Bank  v.  Ontario  Bank,  21  N.  Y.  490;  Thomas  v.  Railway, 
101  U.  S.  71;  New  Castle  Ry.  v.  Simpson,  21  Fed.  Rep.  533;  White  v. 
Franklin  Bank,  22  Pick.  (Mass.)  181;  2  Pars.  Cont.  740;  Gordon's  Ex'rs 


166  CAPITAL    STOCK.  [§  119. 

But  it  has  been  held  that  although  a  corporation  issues 
preferred  stock  without  express  authority,  yet  a  pur- 
chaser, who  voluntarily  subscribes  and  pays  for  it,  for  the 
purpose  of  promoting  the  scheme  under  which  it  was 
issued,  eannot  hold  it  for  over  two  years  after  the  condi- 
tion upon  which  it  was  issued  has  been  fulfilled,  and  then, 
on  the  insolvency  of  the  company,  assert  the  invalidity 
of  the  stock,  and  recover  back  the  money  paid  for  it.^ 
!Nor  is  one's  right  to  recover  money  paid  on  an  ultra  vires 
issue  of  such  stock  impaired  by  reason  of  a  subsequent 
enactment  of  a  statute  authorizing  the  corporation  to  issue 
preferred  stock.^ 

V.  Richmond,  etc.  Co.,  78  Va.  501,  81  Va.  631;  Warren  v.  King,  108 
U.  S.  389;  Burt  v.  Rattle,  31  Ohio  St.  116. 

1  Bard  v.  Banigan,  39  Fed.  Rep.  13. 

In  Anthony  v.  Household  Sewing  Machine  Co.,  supra,  the  plaintiff 
was  one  of  several  persons  who  lent  a  large  amount  of  money  to  the 
defendant  corporation,  under  agreement  with  the  corporation  that 
the}'  were  to  be  repaid  in  preferred  stock,  to  be  subsequently  issued 
by  it.  It  was  supposed  when  the  money  was  lent  that  the  corpora- 
tion had  power  to  issue  such  stock  in  discharge  of  the  agreement, 
but  it  was  afterwards  discovered  that  as  a  matter  of  law  it  did  not 
have  power,  and  therefore  the  plaintiff  demanded  a  return  of  the 
money  which  he  had  lent,  and,  upon  failure  of  the  company  to  re- 
turn it,  brought  an  action  to  recover  it.  Chief  Justice  Durfee,  in 
delivering  the  opinion  of  the  court,  said: 

"  The  agreement  was  not  an  agreement  to  repay  the  loan  in  pre- 
ferred stock,  but  an  agreement  absolutely  to  repay  it  in  that  form. 
It  was  an  agreement  by  the  corporation  to  do  something  which  it 
had  no  power  to  do.  It  was  therefore  void,  and  the  plaintiff  was  en- 
titled to  treat  it  as  void  and  to  reclaim  the  money.  Where  money 
has  been  advanced  under  such  a  contract,  it  can  be  recovered  back 
by  the  party  advancing  it  so  long  as  the  contract  remains  wholly 
unperformed  by  the  other  party,  the  recovery  being  had,  not  under 
the  contract  but  in  disaffirmance  of  it,  on  a  promise  implied  inde- 
pendent of  it." 

-  In  re  Bridgewater  Nav.  Co.,  39  Ch.  Div.  1;  Congress  Spring  Co.  v, 
Knowlton,  103  U.  S.  49;  Anthony  v.  Household  Sewing  Machine  Co., 
16  R.  I.  571. 


§  120.]  CAPITAL    STOCK.  1G7 

§  120.  Poiver  of  corporation  to  deal  in  its  oivn  stoclc. — 
It  has  been  held  in  some  of  the  states  of  the  Union  that 
the  shares  of  capital  stock  of  a  corporation  are  the  lawful 
subjects  of  purchase  and  sale,  may  be  bought  and  sold  in 
the  market,  and,  in  the  absence  of  statutory  provisions 
to  the  contrarj-,  a  corporation,  if  it  acts  in  good  faith, 
may  buy  such  shares  for  its  own  benefit  from  owners  of 
them  upon  such  terms  as  may  be  agreed  on,  subject  to  the 
rights  of  its  creditors  in  proper  cases  to  resort  to  its  capi- 
tal stock,  paid  and  unpaid,  as  a  trust  fund  out  of  which 
they  may  be  entitled  to  have  these  debts  paid.^  In  many 
of  the  states,  however,  this  power  is  i^eguiated  by  direct 
statutory  enactment,  but  in  those  states  where  no  such 
statutory  provisions  exist,  such  power  is  left  to  the  deter- 
mination of  the  courts.  The  true  rule  is  perhaps  laid 
down  by  the  court  in  Olapp  v.  Peterson,  supra,  where  it 
is  said:  " Corporations  may  purchase  their  own  stock  in 
exchange  for  money  or  other  property,  and  hold,  reissue 
or  retire  the  same,  provided  such  act  is  had  in  entire  good 
faith,  in  an  exchange  of  equal  value,  and  is  free  from  all 
fraud,  actual  or  constructive;  this  implying  that  the  cor- 
poration is  neither  insolvent  nor  in  process  of  dissolution, 
and  that  the  rights  of  creditors  are  not  thereby  injuri- 

iCook,  Stockholders,  §§  311,  312;  Blalock  v.  Kernesville  Mfg.  Co., 
110  N.  C.  99;  First  Nat.  Bank  v.  Salem  Mills,  39  Fed.  Rep.  89;  Bank, 
^tc.  V.  Bruce,  17  N.  Y.  510;  Taylor  v.  Export  Co.,  6  Ohio,  176;  In  re 
Ins.  Co.,  3  Biss.  (IT.  S.)  452;  Bank  v.  Transportation  Co.,  18  Vt.  188; 
Clapp  V.  Peterson,  104  111.  26;  Dupee  v.  Water  Power  Co.,  114  Mass. 
37;  Republic  Ins.  Co.  v.  Swigert,  135  111.  150;  Chicago,  etc.  R.  Co,  v, 
Marseilles,  84  111.  145;  Chetlain  v.  Insurance  Co.,  86  111.  220;  Fraser 
V.  Ritchie,  8111.  App.  554;  Eggeman  v.  Blanke,  46  Mo.  App.  318;  Le- 
land  V.  Hayden,  102  Mass.  542;  Eby  v.  Guest,  94  Pa.  St.  160;  Early's 
Appeal.  89  Pa.  St.  160;  Coleman  v.  Columbus  Oil  Co.,  51  Pa.  St.  74; 
Iowa  Lumber  Co.  v.  Foster.  49  Iowa,  25;  State  Bank  v.  Fox,  3  Blatch. 
<U.  S.)  431;  Hartridge  v.  Rockwell,  R.  M.  Charlt.  (Ga.)  260;  Robinson 
\.  Beale,  26  Ga.  17;  Hagie  v.  People's  Ass'n,  107  N.  C.  581. 


168  CAriTAL    STOCK.  [§  120'. 

ously  affected."  In  Ohio  no  corporation  can  buy  or  sell 
its  own  shares  unless  permitted  so  to  do  by  its  charter  or 
law  of  incorporation.^  So  in  Kansas,  banks  organized 
under  the  laws  of  that  state  are  held  to  have  no  power 
to  purchase  their  own  stock,  except  in  some  cases  for  the 
purpose  of  securing  a  previously  existing  debt.^  In  On- 
tario, Canada,  it  is  the  rule  that  a  corporation  cannot 
cancel  or  accept  the  surrender  of  shares  of  stock  in  com- 
promising a  claim  against  it  by  a  shareholder,  Avhere 
the  validity  of  the  shares  or  his  right  to  them  is  not  in 
dispute.'  In  England  the  question  has  been  settled  by  a 
long  line  of  decisions  that  no  such  power  exists  unless  it 
has  been  specifically  granted,  and  that  such  a  purchase  is 
beyond  the  corporate  powers,  illegal  and  void.*  So  it  has 
been  held  that  insolvent  corporations  can  neither  pur- 
chase, nor  receive  in  payment  of  debts  owing  it,  shares 
of  its  own  stock.^  Nor  can  business  corporations  exchange 
their  goods  for  their  capital  stock  so  as  to  reduce  or  re- 
tire the  latter.^  And  if  the  statutes  which  govern  a  com- 
pany only  allow  the  company  to  make  advances  on  the 
security  of  landed  property,  a  company  cannot  advance 
money  to  its  members  on  the  security  of  their  shares." 

*   1  Chapin  v.  Greenlees,  38  Ohio  St.  275. 

2  German  Sav.  Bank  v.  Wulfekuhlen,  19  Kan.  60. 

3  Livingstone  v.  Temperance  Society,  17  Ont.  App.  379. 

4  In  re  London,  etc.  R.  Co.,  5  De  G.  &  S.  402;  Evans  v.  Coventry,  5 
De  G.,  M.  &  G.  911,  8  De  G.,  M.  &  G.  835;  In  re  Northern  Coal  Min. 
Co.,  13  Beav.  472;  Zulueta's  Case,  L.  R.  5  Ch.  444;  Ernest  v.  Nichols, 
6  H.  L.  Cas.  401;  In  re  United  States  Co.,  5  Ch.  707,  L.  R.  7  Eq.  76; 
In  re  Marseilles,  etc.  Co.,  7  Ch.  161;  Hope  v.  International  Co.,  4  Ch. 
Div.  327;  Trevor  v.  Whitworth,  12  App.  Cas.  (H.  L.)  409. 

5  Currier  v.  Lebanon  Co.,  56  N.  H.  262;  Savings  Bank  v.  Wulfekuh- 
len, 19  Kan.  60;  Taylor,  Corp,  §  135. 

est.  Louis  Carriage  Mfg.  Co.  v.  Hilbert,  24  Mo.  App.  338. 
7  Collerne  v.  London  Bldg.  Soc,  25  Q.  B.  Div.  485. 


§§  121,  122.]  CAPITAL    STOCK.  109 

§  121.  Toiver  to  inircliase  stocli  of  another  corpora- 
tion.—  It  is  now  well  settled  that  a  corporation  cannot 
purchase  or  deal  in  the  stock  of  other  corporations  unless 
expressly  authorized  by  law  so  to  do.^  But  a  corpora- 
tion ma}''  take  stock  in  another  company  in  payment  of 
a  debt.^  Though  a  corporation  may  take  the  stock  of 
another  corporation  by  way  of  security  for  a  debt,  it  has 
no  right  to  invest  its  corporate  funds  in  the  purchase  of 
such  stock.'  So  it  is  beyond  the  scope  of  the  powers  of 
a  corporation,  having  the  right  to  mine,  to  organize  an- 
other corporation  for  mining  purposes  or  to  deal  in  the 
stock  of  such  corporation.* 

§  122.  Instances  where  poiver  denied. —  A  corporation 
formed  for  the  purpose  of  manufacturing  and  selling  gas 
has  no  power  to  purchase  and  hold  or  sell  shares  of  stock 
in  other  gas  companies  as  an  incident  to  the  purpose  of 
its  formation,  even  though  such  power  is  specified  in  its 
articles  of  incorporation.^  JSTor  has  an  insurance  company 
the  power  or  legal  right  to  subscribe  for  stock  in  a  sav- 
ings bank  and  building  association ;  ^    nor  to  purchase 

iTalmage  v.  Pell,  7  N.  Y.  348;  Berry  v.  Yates,  24  Barb.  (N.  Y.) 
200;  Milbank  v.  New  York,  etc.  R.  Co.,  64  How.  Pr.  (N.  Y.)  20; 
Mechanics'  Sav.  Bank  v.  Meriden,  etc.  Co.,  24  Conn.  159;  Central  R. 
Co.  V.  Penn.  R.  Co.,  31  N.  J.  Eq.  475:  Hazlehurst  v.  Savannah,  etc. 
R  Co.,  43  Ga.  13;  Valley  R.  Co.  v.  Lake  Erie  Ins.  Co.,  46  Ohio  St. 
44;  People  v.  Chicago  Gas  Trust  Co.,  130  111.  268,  384;  Franklin  Co. 
V.  Lewiston,  etc.,  68  Me.  43;  Hill  v.  Nisbet,  100  Ind.  341;  Compagnie 
Francaise  v.  Western  Union  Co.,  11  Fed.  Rep.  862;  Solomans  v. 
Laing,  12  Beav.  339;  Franklin  Bank  v.  Commercial  Bank,  36  Ohio 
St.  350;  Buford  v.  Keokuk  Co.,  3  Mo.  App.  159. 

-  Holmes,  etc.  Mfg.  Co.  v.  Holmes,  etc.  Co.,  127  N.  Y.  253;  Howe  v. 
Boston  Carpet  Co.,  16  Gray  (Mass.),  493. 

3  Milbank  v.  N.  Y.  etc.  R.  Co.,  64  How.  Pr.  (N.  Y.)  20. 

4  McMillan  v.  Carson  Min.  Co.,  13  Phila.  (Pa.)  404. 

5  People  V.  Chicago  Gas  Co.,  130  111.  268. 

^  Mutual,  etc.  Ass'n  v.  Meriden  Agency  Co.,  24  Conn.  159. 


170  CAPITAL    STOCK.  [§  122. 

stock  in  another  insurance  company.^  So  it  has  been  held 
that  neither  a  note-selling  company,'^  nor  a  lumber  com- 
pany,' has  power  to  invest  in  the  shares  of  a  bank;  nor  a 
steamship  company  to  subscribe  for  stock  in  a  dry-dock 
-company.*  On  the  other  hand,  it  has  been  held  that  a 
steamboat  company  may  purchase  stock  in  another  rival 
line,  even  though  the  evident  purpose  be  to  injure  it.* 
And  it  is  clearly  legal  for  a  manufacturing  company  to 
take  the  stock  of  another  in  payment  of  a  debt.^  So  re- 
ligious and  charitable,  and  other  like  corporations,  not 
for  profit,  have,  it  seems,  implied  power  to  invest  their 
funds  in  stock  of  other  corporations.^  There  has  been  some 
controversy,  however,  Avhether  one  corporation  could  sell 
all  its  property  to  another  corporation,  taking  pay  in 
stock  of  the  latter,  and  dividing  such  stock  among  the 
shareholders  of  the  selling  corporation.  The  weight  of 
authority  holds  that  such  a  transaction  is  ultra  vires,  and 
may  be  prevented  by  any  stockholder  of  the  former  cor- 
poration.^ So  a  contract  by  a  corporation  created  under 
the  laws  of  Ohio,  while  solvent  and  engaged  in  a  profit- 
able business,  to  sell  its  plant  and  assets  for  a  consider- 
ation, the  greater  part  of  which  is  stock  and  bonds  of 
another  corporation  to  be  organized  to  carry  on  the  busi- 
ness, no  exigency  making  such  a  sale  necessary  for  the 
protection  of  the  stockholders,  is  ultra  vires,  as,  under 

iRe  British  Life  Ins.  Ass'n,  8  Ch.  Div.  679;  Berry  v.  Yates,  34  Barb. 
<N.  y.)  199. 

2  Joint  Stock  Co.  v.  Brown,  L.  R.  8  Eq.  381. 

3  Sumner  v.  Marcy,  3  W.  &  M.  (U.  S.)  105. 

4  New  Orleans  Co.  v.  Ocean  Dry -Dock  Co.,  28  La.  Ann.  173. 

6  Booth  V.  Robinson,  55  Md.  419;  Parker  v.  Bernal,  66  Cal.  112. 

6  Howe  V.  Boston  Carpet  Co.,  83  Mass.  493. 

''Pearson  v.  Concord  R.  R.  Co.,  6'3  N.  H.  537;  Hodges  v.  Screw  Co., 
1  R.  I.  322,  3  R.  I.  9. 

8  Taylor  v.  Earle,  8  Hun  (N.  Y.),  1;  Frothingham  v.  Barney,  6  Hun 
<N.  Y.),  306. 


f  §  123,  124.]  CAPITAL    STOCK.  171 

the  laws  of  that  state,  one  corporation  cannot  become  the 
ou-ner  of  stock  in  another,  unless  such  po\Yer  is  clearly 
conferred  by  statute.^ 

§  123.  Power  of  foreign  corporation  to  imrcliase  stock 
of  domestic  company. —  So  it  has  been  held  that  the  pur- 
chase by  a  foreign  corporation  of  the  stock  of  a  domestic 
corporation  for  the  purpose  of  controlling  it  is  ultra  vires 
and  void,  though  they  are  engaged  in  a  similar  business; 
and  in  an  action  by  the  foreign  company  to  recover  half 
of  a  debt  of  the  domestic  company,  which  the  plaintiff 
was  obliged  to  pay  to  protect  the  property  of  such  com- 
pany, brought  against  the  president  of  the  domestic  com- 
]iany,  who  had  agreed,  in  consideration  of  the  price  paid 
for  the  stock,  to  discharge  one-half  of  the  debts  of  the 
domestic  company,  defendant  is  not  estopped  to  set  up 
the  invalidity  of  the  contract,  though  he  received  the 
benefits  of  it.^ 

§  12-1.  Poiver  to  declare  dividends. —  A  dividend  is  a 
fund  which  a  corporation  sets  apart  from  its  profits  to  be 
divided  among  its  members.*  It  is  ordinarily  a  matter 
of  discretion  resting  with  the  managers  or  directors  of 
a  corporation  whether  a  dividend  shall  be  made,  how 
much  it  shall  be,  and  when  and  where  payable.^  While, 
as  a  general  rule,  the  officers  of  a  corporation  are  the  sole 

lEasum  v.  Buckeye  Brew.  Co.,  51  Fed.  Rep.  156;  Buckeye  Marble, 
etc.  Co.  V.  Harvey,  92  Tenn.  115. 

2  Buckeye  Marble  Co.  v,  Harvey,  93  Tenn.  115. 

sLockhart  v.  Van  Alstyne,  31  Mich.  76;  Pennsylvania  Co.  v.  Erie 
R.  R.,  108  Pa.  St.  621;  Williston  v.  Michigan  R.  Co.,  13  Allen  (Mass.), 
404. 

*  Williams  v.  Western  Union  Tel.  Co.,  93  N.  Y.  162;  Chaflfee  v.  Rut- 
land R.  Co.,  55  Vt,  110;  Barry  v.  Merchants'  Exch.,  1  Sandf.  Ch, 
(N.  Y.)  280;  New  York,  etc.  R.  Co.  v.  Nickals,  119  U.  S.  296;  Jackson 
V.  Plank  Road  Co.,  31  N.  J.  L.  277. 


172  CAPITAL    STOCK.  [§  125, 

judges  as  to  the  propriety  of  declaring  dividends,  and  the 
courts  will  not  interfere  with  the  proper  exercise  of  their 
discretion,  where  the  right  to  a  dividend  is  clear  and  fixed 
by  contract,  and  requires  the  directors  to  take  action  be- 
fore the  right  can  be  asserted  by  an  action  at  law,  a  court 
of  equity  will  interfere  to  compel  such  action,  and,  when 
necessary,  to  restrain  by  injunction  any  action  adverse  to 
such  right.^  While  it  is  usually  left  to  the  directors'  dis- 
cretion as  to  the  amount  of  the  dividend  to  be  declared, 
yet  the  directors  have  no  power  to  discriminate  between 
its  stockholders,  where  no  such  power  of  discrimination 
is  conferred  by  the  charter  of  the  corporation.^ 

§  125,  Poiver  to  pledge  or  mortgage  future  calls. —  Under 
the  power  to  pledge,  mortgage  or  charge  the  works,  her- 
editaments, plant,  property  and  effects  of  a  company,  in 
order  to  secure  the  payment  of  moneys  borrowed,  the 
proceeds  of  a  call  already  made,  but  not  yet  paid,  may  be 
charged,  but  not  the  proceeds  of  a  future  call.'  But  where 
power  to  mortgage  a  future  or  unpaid-up  capital  is  given 
by  the  memorandum  or  articles  of  association,  a  mortgage 
by  the  company  of  its  future  or  uncalled  capital  is  valid, 
even  as  against  creditors  in  a  winding  up,  the  calls  in  a 
Avinding  up  being  part  of  the  assets  or  capital  of  the  com- 
pany.^ 

1  Boardman  v.  Lake  Shore,  etc.  Co.,  84  N.  Y.  167,  and  cases  cited. 

2  Jones  V.  Terre  Haute  R.  Co.,  57  N.  Y.  196;  Phelps  v.  Farmers' 
Bank,  26  Conn.  269;  Stoddard  v.  Foundry  Co.,  34  Conn.  542;  Good- 
win V.  Hardy,  57  Me.  143;  March  v.  Eastern,  etc.  R.  Co.,  43  N.  H.  515; 
Coles  V.  Bank  of  England,  10  Ad.  &  Ell.  437;  Festial  v.  King's  Col- 
lege, 10  Beav.  491;  City  of  Ohio  v.  N.  Y.  etc.  R.  Co.,  5  Abb.  Pr.  (N.  Y.) 
377;  King  v.  Paterson  R.  R.  Co.,  29  N.  J.  L.  82;  Brown  v.  Lehigh 
Canal  Co.,  49  Pa.  St.  270;  Granger  v.  Bassett,  98  Mass.  462;  Kent  v. 
Quicksilver  Min.  Co.,  78  N.  Y.  159;  Reese  v.  Bank,  81  Pa.  St.  78. 

3  In  re  Sankey  Brook  Coal  Co.,  L.  R.  10  Eq.  381,  9  Eq.  721;  Ex 
parte  Stanley,  33  L.  J.  (Ch.)  335. 

4  In  re  Pyle  Works,  44  Ch.  Div.  534. 


§  126.]  CAPITAL    STOCK.  173 

§  126.  LicibiliUj  of  corporation  on  dividend  declared. — 
When  a  dividend  upon  its  stock  has  been  declared  by  a 
corporation,  it  belongs  to  the  holders  of  the  stock  at  the 
time  of  the  declaration,  without  regard  to  the  source  from 
Avhich,  or  the  time  during  which,  the  funds  derived  were 
acquired  by  the  corporation.^  Accordingly,  when  such 
dividend  is  declared,  it  thereupon  becomes  the  individual 
property  of  the  stockholder,  and  he  is  entitled  to  receive 
the  same  on  demand  of  the  proper  agent,  and  if  not  paid 
on  demand  he  may  maintain  an  action  therefor.^  Al- 
though directors  have  the  right  to  lix  the  time  and  place 
•of  payment  of  such  dividend,  the  time  should  not  be  re- 
mote, or  the  place  so  far  distant  as  to  prejudice  the  rights 
of  the  stockholders;  and  if  directors  select  a  banking 
house  of  good  credit  and  deposit  the  money  there  to  pay 
dividends,  and  give  notice  to  each  stockholder  of  such  de- 
posit, and  the  stockholder,  after  receiving  such  notice, 
neglects  to  draw  the  money  within  a  reasonable  time  and 
a  loss  is  incurred  by  a  failure  of  the  bank,  it  Avill  fall 
upon  the  stockholder,  and  he  cannot  call  upon  the  com- 
pany to  reimburse  hlm.^  But  if  a  dividend  is  declared 
payable  elsewhere  than  at  the  office  of  the  corporation, 
the  party  through  whom  it  is  paid  becomes  the  agent  of 
the  company;  and  if  such  agent  fail  to  pay  it  over  to  the 
stockholder,  the  loss  falls  upon  the  corporation.* 

1  Jermain  v.  Lake  Shore  Ry.  Co.,  91  N.  Y.  483;  Brisbane  v.  Dela- 
ware, etc.  R.  Co.,  94  N.  Y.  204,  25  Hun  (N.  Y),  438;  Cleveland  R.  Co. 
V.  Robbins,  35  Ohio  St.  483. 

2 Granger  v.  Bassett,  98  Mass.  462;  King  v.  Paterson,  etc.R.  Co.,  29 
N.  J.  L.  82;  Stoddard  v.  Shetucket  Co.,  34  Conn.  542;  City  of  Chicago 
T.  Cleveland,  6  Ohio  St.  489;  Harris  v.  San  francisco  R.  Co.,  41  CaL 
•393. 

3  King  v.  Paterson,  supra. 

*  King  V.  Paterson,  supra. 


174  CAPITAL    STOCK.  [§  127, 

§127.  Liahility  on  illegal  issue  of  stoclc. —  When  the 
issue  of  shares  by  a  corporation  is  illegal,  and  no  suffi- 
cient steps  have  been  taken  to  authorize  the  creation  of 
the  capital  stock,  where  a  person  has  acted  and  been 
treated  as  a  stockholder  in  respect  of  shares  which  the 
company  had  no  power  to  issue,  the  person  taking  them 
cannot,  by  estoppel  or  otherwise,  become  a  member  of 
the  company  in  respect  to  them,  nor  is  the  corporation 
liable  on  such  illegal  issue.^  But  where  a  clerk  of  the 
corporation  fraudulently  filled  out  a  certificate  of  shares 
of  its  stock  in  the  name  of  a  fictitious  person,  procured 
the  signatures  of  the  officers  and  negotiated  it,  signing  the 
name  of  the  fictitious  person  to  the  assignment  and  power 
of  attorney,  and  the  transferee  bought  in  good  faith,  and 
obtained  a  transfer  on  the  books  and  a  new  certificate  to 
himself,  the  corporation  was  held  estopped  from  denying 
its  validity  and  consequent  liability.^ 

iLindleyon  Part.  134;  Allen  v.  Herrick,  81  Mass.  274;  Turnbul 
V.  Payson,  95  U.  S.  418;  American  Tube  Works  v.  Boston  Mach.  Co., 
139  Mass.  5;  Bank  of  Hindustan  v.  Alison,  L.  R.  6  C,  P.  54 

2  Manhattan  Beach  Co.  v.  Harned,  23  Blatch.  (U.  S.)  494;  s.  C,  27 
Fed.  Rep.  484.  And  see  Kent  v.  Quicksilver  K  Co.,  78  N.  Y.  159; 
Eaton  V.  Pacific  National  Bank,  144  Mass.  260. 


CHAPTEE  IX. 

T^Z   D  :  :7?.3*Z  APPLIED  TO  EAILEC^I     I  :??.?.  J."  I XS. 

~     -^         -Tiai  power  to  make  ocHitxacts. 

:  rsTts  to  cany  beyond  own  hse. 
_     :         ^Teements  between  TailrfMd& 

1--,  1  ^-: -_;  ^joteacts. 

133:  itaiiTOad  btHuls — Definition. 

133L  Fbwer  to  i^oe  b(»ds. 

131.  FonnaUtaes  peescxibed  mn^  be  stxictty  pmsaed. 

1^  Xegotiabflity  <rf  railroad  bcwds. 

13Gl  Power  to  guaranty  bmids  of  anotiiffr  comiMuny. 

1ST.  Power  to  lease  road  and  firancJi^iK. 

13S.  Ulfra  vira  lease  will  not  be  set  aside  at  suit  (^  lessens 

139L  Instances  wfaoB  power  denied. 

140l  Fbwer  to  nuKt^ige  pn^oty. 

IIL  PowCT  to  nHMttgage  franrfiisRR 

14^  Conaolidation  and  anmlgamatiwn — Defimfia& 

1^  Power  <rf  ctMrpocations  to  cotwoHdate. 

IM.  Effiect  <tf  cxMistdidatioa. 

l-lo.  Effect  of  inteislbatie  conyoKdatJMi. 

I-ISl  Rights  and  liabilities  of  consolidated  oon^anj'. 

147.  ConsolidatiMi  as  afieciing  storfdioldatSi 

y&.  ConsolidatitHi  as  aflecUug  tamation. 

1^  Trusts  and  illegal  omnbinatiaasL 

§  12S.  Crfiieral  power  to  mutJie  contracts. —  A  railroad 
company,  like  other  coiporatioiis,  has  the  implied  power 
to  enter  into  contracts  whi(^  are  necessaiy  to  its  bosm^s, 
and  incidental  to  the  proper  oonstraction,  maint^ianoe 
and  operation  of  its  road.^    Bat  a  railroad  corporaditHi, 

iPierce  on  Railroads.  §  49£»:  Sooth  Wales  R  Ca  t.  TtfOmnnii^  10 
C  R  (?f.  Sl)  673, 109  E.  C  L.  674;  Hayw,  etc  t.  BaldnMse,  etc  R.  Go, 
6  Gin  (Md.),  ^7,  31  Md.  50;  Hamfltion  t.  Newcastle  R  Col,  9  Ind.  §39; 


170  KAILEOAD   COKPOEATIONS.  [§  129. 

being  in  its  nature  of  a  quasi-'puhliG  character,  may  not 
enter  into  any  contract  or  obligation  whereby  it  releases 
itself  from  any  of  its  duties  or  obligations  to  the  public.^ 

§  129.  Contract  to  carry  'beyond  own  line. —  It  is  now- 
well  settled  that  a  railroad  company  may  make  contracts 
with  passengers  or  shippers  for  carriage  beyond  its  own 
lines;  and  in  order  to  fulfill  such  contracts  may  make  suit- 
able arrangements  with  connecting  lines  of  railway  or 
steamship.  Such  contracts  have  been  held  not  to  be  ultra 
vires  in  numerous  cases.^  And  where  such  contract  is  en- 
tered into,  the  company  so  contracting  is  liable  not  onl}'- 
for  the  loss  of  the  goods  upon,  their  own  line,  but  also  for 
loss  of  any  goods  upon  connecting  lines.^   xind  it  has  been 

Frye  v.  Tucker,  24  III.  180;  Joy  v.  St.  Louis,  138  U.  S.  1;  Shrewsbury, 
etc.  R.  Co.  V.  Northwestern  R.  Co.,  6  H.  L.  113;  Smith  v.  Nashua,  etc. 
R.  Co.,  27  N.  H.  86;  Buffit  v.  Troy,  etc.  R.  Co.,  40  N.  Y.  168;  Churcli 
V.  Sterling,  16  Conn.  388;  Rorer  on  Railroads,  228;  Western  Bank  v. 
Tallman,  17  Wis.  530. 

1  Thomas  v.  Railroad  Co.,  101  U.  S.  71;  York,  etc.  R.  Co.  v.  Winans, 
17  How.  (U.  S.)  39.     And  see  cases  cited  in  §  137,  post. 

-  Beach,  Priv.  Corp.,  §  407;  Thompson,  Com.  Corp.,  §  5871;  Taylor, 
Priv.  Corp.,  §  308;  Weed  v.  Saratoga,  etc.  R.  Co.,  19  Wend.  (N.  Y.) 
534;  Wylde  v.  North  River,  etc.  Co.,  53  N.  Y.  156;  Root  v.  Great  West- 
ern R.  Co.,  55  N.  Y.  524;  East  Tenn.  etc.  R.  Co.  v.  Nelson.  1  Coldw. 
<Tenn.)  276;  Newell  v.  Smith,  49  Vt.  255;  Roberts  v.  Van  Buskirk,  31 
N.  Y.  661;  Steamboat  Co.  v.  Brown,  54  Pa.  St.  77;  Noyes  v.  Railroad 
Co.,  27  Vt.  110;  Peet  v.  Railway  Co.,  19  Wis.  118;  St.  Louis,  etc.  R. 
Co.  V.  Pipes,  13  Kan.  505;  Wahl  v.  Holt.  26  Wis.  703;  Illinois  Cent. 
R.  Co.  V.  Johnson,  34  111.  389;  Pennsylvania  R.  Co.  v.  Berry,  68  Pa.  St. 
272;  Southern  Ex.  Co.  v.  Shea,  38  Ga.  519;  Bryan  v.  M.  &  P.  R.  Co., 
11  Bush  (Ky.),  597;  Bennett  v.  Peninsular  S.  Co.,  6  C.  B.  775. 

3  Great  Western  Ry.  Co.  v.  Blake,  7  H.  &  N.  986;  Stewart  v.  Erie, 
etc.  Ry.  Co.,  17  Minn.  372;  Wiggins  Ferry  Co.  v.  Chicago  R.  Co.,  73 
Mo.  389;  Green  Bay.  etc.  R.  Co.  v.  Union  S.  Co.,  107  U.  S.  98;  Arnot 
V.  Erie  R.  Co.,  5  Hun  (N.  Y.),  608;  Parish  v.  Wheeler,  22  N.  Y.  494; 
Wheeler  v.  San  Francisco  R.  Co.,  31  Cal.  46;  Rutland,  etc.  R.  Co.  v. 
Proctor,  29  Vt.  98;  SJ)avvmut's  Bank  v.  Plattsburg  Ry.,  31  Vt.  491; 


§  130.]  EAILROAD    COEPOEATIOXS.  ITT 

held  in  many  cases  that  even  the  acceptance  of  goods  for 
shipment  whose  destination  is  beyond  the  company's  own 
lineis  implies  a  contract  to  deliver  at  destination.^  How- 
ever, the  general  rule  in  the  United  States  seems  to  be  that 
the  acceptance  of  goods  for  shipment  beyond  the  com- 
pany's own  lines,  in  the  absence  of  any  contract,  obligates 
the  carrier  only  to  transportation  to  end  of  own  line  and 
a  delivery  there  to  the  next  connecting  carrier.- 

§  130.  Traffic  agreements  between  railroad  comjyanies. 
A  railroad  company  may,  if  not  restrained  by  its  charter, 
€nter  into  contracts  with  connecting  carriers  for  the  pur- 
pose of  providing  for  through  transportation  over  its 
road  and  over  the  line  of  such  carrier,  if  made  with  a 
honafide  purpose  of  regulating  traffic  in  a  reasonable  and 

Feital  v.  Middlesex  R.  Co.,  109  Mass.  398;  Morse  v.  Brainerd,  41  Vt. 
550;  Railroad  Co.  v.  Transportation  Co.,  16  Wall.  (U.  S.)  324;  Evans- 
ville  Ry.  Co.  v.  Androscoggin,  etc.,  23  Waa  (U.  S.)  594;  Phillips  v. 
Railroad  Co.,  78  N.  C.  294;  Pratt  v.  Railroad  Co.,  22  Wall.  (U.  S.)  132; 
Hill  Mfg.  Co.  V.  Railroad  Co.,  104  Mass.  122;  Gray  v.  Jackson,  51  N.  H. 
9;  Woodward  v.  Railroad  Co.,  1  Biss.  (U.  S.)  403. 

1  Illinois  Cent.  R.  Co.  v.  Frankenberg,  54  111.  88;  Chicago,  etc.  R.  Co. 
V.  People,  56  111.  365;  Adams  Ex.  Co.  v.  Wilson,  81  111.  339;  Southern 
Ex.  Co.  V.  Shea,  38  Ga.  519;  Kyle  v.  Railroad  Co.,  10  Rich.  (S.  C.)  382; 
Carter  v.  Peck,  4  Sneed  (Ky.),  201;  Bennet  v.  Filyaw,  1  Fla.  403;  Mul- 
ligan V.  Railway  Co.,  36  Iowa,  181 ;  East  Tenn.  etc.  Co.  v.  Rogers,  6 
Heisk.  (Tenn.)  143;  Lock  Co.  v.  Railroad  Co.,  48  N.  H.  339. 

2 Nutting  V.  Railroad  Co.,  1  Gray  (Mass.),  502;  Darling  v.  Railroad 
Co.,  11  Allen  (Mass.),  295;  Hood  v.  Railroad  Co.,  22  Conn.  502;  Per- 
kins V.  Railroad  Co..  47  Me.  573:  Skinner  v.  Hall,  60  Mo.  477;  Rail- 
road Co.  V.  Manufacturing  Co.,  16  Wall.  (U.  S.)  318;  Santwood  v.  St. 
John,  6  Hill  (N.  Y.),  158;  Railroad  Co.  v.  Pratt,  22  Wall.  (U.  S.)  123; 
Brintnall  v.  Railroad  Co..  32  Vt.  665;  Farmers,'  etc.  Bank  v.  Trans- 
portation Co.,  23  Vt.  186;  McMillan  v.  Railroad  Co.,  16  Mich.  79; 
Crawford  v.  Railroad  Ass'n,  51  Miss.  222;  Burroughs  v.  Railroad  Co., 
100  Mass.  26;  Camden,  etc.  R.  Co.  v.  Forsyth,  61  Pa.  St.  81;  Balti- 
more, etc.  R.  Co.  V.  Schumaker,  29  Md.  176;  Irish  v.  Railroad  Co.,  54 
N.  Y.  502. 
12 


178  EAILROAD   CORPORATIONS.  [§  131. 

just  manner.^  All  contracts  between  rival  railroad  com- 
panies which  prevent  competition  are  not  necessarily 
contrary  to  public  policy,  illegal  and  detrimental  to  the 
public  welfare,  the  vehement  declarations  of  demagogic 
politicians  to  the  contrary  notwithstanding.  When  such 
contracts  prevent  an  unhealthy  competition,  and  furnish 
the  public  with  adequate  facilities  at  fixed  and  reasonable 
rates,  they  are  beneficial  and  in  accordance  with  sound 
principles  of  public  policy .^  So  where  two  groups  of 
railway  companies,  being  respectively  the  owners  of  inde- 
pendent coterminous  routes,  agreed  to  divide  the  profits 
of  the  whole  traflBc  in  certain  fixed  proportions,  calculated 
on  the  experience  of  the  past  course  of  traffic,  it  was  held 
that  such  agreement  was  not  ultra  mres? 

%  131.  Pooling  contracts. —  "Pools"  have  been  defined 
by  a  very  able  writer  to  be  contracts  between  rival  rail- 
way companies  whereby,  in  order  to  prevent  competition, 
their  business  is  united  in  one  common  total,  from  which 
the  business  or  the  money  received  therefor  is  divided 
among  the  combining  companies  in  fixed  percentages.* 
The  same  author  has  further  declared  them  to  be  of  two 
kinds  —  traffic  pools  and  money  pools.  A  traffic  pool  is 
an  agreement  allotting  a  certain  percentage  of  the  total 
traffic  to  each  road,  and  providing  that,  if  any  road  ex- 
ceeds its  share  of  the  business,  freight  shall  be  diverted 

1  Stewart  v.  The  Erie,  etc.  Transp.  Co.,  17  Minn.  372;  South  Wales 
Ry.  V,  Redmond,  100  E.  C.  L.  674;  Sussex,  etc.  Ry.  v.  Morris,  etc.  R. 
Co.,  19  N.  J.  Eq.  13;  Simpson  v.  Denison.  10  Hare,  51;  Midland  Ry. 
Co,  V.  Great  Western  Ry.  Co.,  L.  R.  8  Ch.  841,  7  Moak's  Rep.  408; 
Llanelly  Ry.  v.  London,  etc.  Ry.,  L.  R.  7  H.  L.  550,  13  Moak's  Rep.  73. 

2  Hare  v.  London,  etc.  Ry.  Co.,  2  Johns.  &  H.  80.  7  Jur.  (N.  S.)  1145, 
30  L.  J.  Ch.  817;  Manchester,  etc.  Ry.  Co.  v.  Concord  R.  R.,  20  Ati. 
Rep.  (N.  H.)  383;  1  Redf.  Rys.,  §  146;  Mor.  Priv.  Corp.,  §  1131. 

3  Hare  v.  London,  etc.  Ry.  Co.,  supra. 

*  The  Railways  of  the  Republic,  Hudson,  196. 


§  131.]  EAILROAD   CORPORATIONS.  17!> 

from  it  to  the  other  roads  until  the  agreed  proportion  is 
restored.  A  money  pool  is  an  agreement  whereby  the 
money  received  by  all  the  combining  roads  for  transporta- 
tion is  brought  together  into  one  total  and  divided  among 
the  roads  in  certain  fixed  percentages,  which  do  not  nec- 
essarily correspond  to  the  proportion  of  the  freight  act- 
ually carried  by  each  road.^  "Whether  or  not  pooling 
contracts  are  illegal  and  void  would  seem  to  depend  upon 
the  laws  of  the  state  under  which  the  company  was  or- 
ganized. For  instance,  in  New  Jersey,  such  contracts 
have  been  recognized  by  the  courts  as  valid ;  ^  while  in 
Louisiana  it  has  been  quite  recently  held  that  pools  are 
not  enforceable,  as  contrary  to  public  policy.^  But  in 
New  York  it  has  been  decided  that  a  pooling  combina- 
tion for  dividing  certain  territory  between  parallel  rail- 
roads is  not  contrary  to  public  policy.*  The  railroad 
commission  of  that  state,  however,  has  declared  pooling 
contracts  invalid.^  And  in  Pennsylvania  a  pool  formed 
for  the  division  of  a  coal  district,  whereby  the  committee 
were  to  fix  prices  of  coal,  rates  of  freight,  etc.,  was  held 
to  be  both  against  the  statute  of  New  York — where  the 
contract  was  made  —  and  also  against  the  public  policy 
of  the  state,  wherein  the  coal  district  was  situated.^  So 
in  Indiana  combinations  between  common  carriers  to  pre- 
vent competition  are  regarded  as  'prima  facie  illegal,  and 
in  order  to  establish  the  legality  of  any  pool  the  burden 
is  on  the  carrier  to  show  that  the  pool  was  formed  to 
prevent  ruinous  competition,  and  that  it  does  not  establish 

1  The  Railways  of  the  Eepublic,  Hudson,  197. 

2  Sussex  R.  Co.  v.  Morris,  etc.  Co.,  19  N.  J.  Eq.  13,  20  N.  J.  Eq.  542; 
Elkins  V.  Camden,  etc.  R.  Co.,  36  N.  J.  Eq.  341. 

3  Tex.  &  Pac.  R.  Co.  v.  Southern  Pac.  R.  Co.,  41  La.  Ann.  970. 

<  Ives  V.  Smith,  3  N.  Y.  Supp.  645;  affirmed,  55  Hun  (N.  Y.),  606. 

5  1  N.  Y.  Railroad  Com.  Rep.  (1885),  77. 

«  Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa.  St.  186. 


180  EAILKOAD   COKPOEATIONS.  [§  132. 

unreasonable  rates,  unjust  discrimination  or  oppressive 
regulations.'  The  regulation  of  rates  and  freight  charges 
between  railroad  corporations  is  now,  in  many  of  the 
states,  intrusted  to  the  wise  discretion  of  a-  railroad  com- 
mission, these  officers  usually  being  men  with  little  or  no 
railroad  experience,  and  whose  resplendent  abilities  to- 
ward confusing  seemingly  plain  business  transactions  is 
strikingly  exemplified  in  the  number  of  suits  brought  in 
the  United  States  courts  praying  relief  from  the  heavy 
hand  of  these  political  blunderers.  It  must  be  added,  in 
concluding  this  branch  of  the  subject,  that  interstate  com- 
merce pooling  has  been  forbidden  by  act  of  congress.^ 

§  132.  Railroad  l)onds  —  Definition. —  Railroad  bonds 
are  instruments  under  seal  containing  an  acknowledg- 
ment of  certain  debts  and  an  agreement  to  pay  the  same 
upon  the  terms  stated.  They  are  a  kind  of  public  funds 
put  on  the  market  and  dealt  in  as  such.  Coupons,  or  in- 
terest certificates  for  each  instalment  of  interest  accruing 
during  the  time  the  bonds  have  to  run,  are  attached  to 
them  and  form  a  part  of  the  original  bonds.^  The  mort- 
gage provides  for  the  security  of  the  particular  bonds  it 
describes,  and  the  company  puts  the  bonds  out  from  time 
to  time  as  occasion  requires.  When  thus  put  upon  the 
market  they  are  treated  as  current  until  past  due  or  act- 
ually retired.  The  security  is  considered  a  continuing 
one,  and  the  bonds  negotiable  by  the  company  so  as  to 
carry  the  mortgage  security  until  they  have  become  com- 

1  Cleveland,  etc.  R.  Co.  v.  Closser,  126  Ind.  348.  And  see  Denver, 
etc.  Co.  V.  Atchison,  etc.  R  Co.,  110  U.  S.  667. 

2  Interstate  Commerce  Act,  24  Stat,  at  L.  380. 

3 19  Am.  &  Eng.  Ency.  Law,  719;  Cooper  v.  Corbin,  105  111.  224;  Peoria, 
etc.  R.  Co.  V.  Thompson,  103  111.  187;  Harmock  v.  Farmers'  L.  &  T. 
Co.,  105  U.  S.  77;  Farmers'  L.  &  T.  Co.  v.  St.  Joseph,  etc.  R.  Co..  3 
Dill.  412,  2  Fed.  Rep.  117;  Titus  v.  Mabee.  25  111.  257. 


§§  183,  134.]  KAILROAD    COrvPORATIOls'S.  181 

mercially  dishonored,  or  something  else  has  been  done  to 
deprive  the  company  of  its  power  of  floating  them.^ 

§  133.  Power  to  issue  londs. —  The  power  of  a  railroad 
corporation  to  issue  bonds  for  the  purpose  of  raising 
money  for  its  extension,  maintenance  and  operation  is 
now  so  well  established  that  it  would  almost  seem  a  work 
of  supererogation  to  cite  authorities  to  support  the  prop- 
osition. This  is  one  of  the  incidental  powers  necessary 
for  its  very  existence.  A  bond  is  merely  an  obligation 
under  seal;  and  such  corporation  having  the.  right  to 
make  contracts  under  which  it  may  incur  debts,  and  the 
right  to  make  and  use  a  common  seal,  a  contract  under 
seal  is  not  only  within  the  scope  of  its  powers,  but  was 
originally  the  usual  and  peculiarly  appropriate  form  of 
corporate  agreement.^  This  power,  however,  is  usually 
given  by  charter  or  by  general  statute. 

§  134.  Formalities  ])rescrihed  must  te  strictly  pur  sued. 
When  the  statute  under  which  the  corporation  was  or- 
ganized prescribes  certain  formalities  to  be  followed  in 
the  issuance  of  bonds,  they  must  be  strictly  complied  with 
by  the  officers  of  the  company,  or  they  will  be  void  as 
against  the  corporation,  even  though  such  bonds  be  in  the 
hands  of  bona  fide  holders.*  So  where  the  statutes  pre- 
scribed that  such  bonds  should  be  certified  across  their 
face,  and  further  required  them  to  be  registered,  bonds 

1  Claffin  V.  South  Carolina,  etc.  R.  Co.,  8  Fed.  Rep.  118,  4  Hughes, 
12,  4  Am.  &  Eng.  Ry.  Cases,  231,  19  Am.  &  Eng.  Ency.  Law,  719. 

2Comm.  V.  Smith,  10  Allen  (Mass.),  448;  Tread  well  v.  Salisbury 
Mfg.  Co.,  7  Gray  (Mass.),  393. 

3  Hackensack  Water  Co.  v.  De  Kay,  36  N.  J.  Eq.  548;  Singer  v. 
St.  Louis  R.  Co.,  6  Mo.  App.  427;  Webb  v.  Heme  Bay,  L.  R.  5  Q.  B. 
643;  Chambers  v.  Manchester,  etc.  R.  Co.,  5  Best  &  S.  588;  Comm.  v. 
Smith,  10  Allen  (Mass.),  448;  Rockwell  v.  Elkhorn  Bank,  13  Wis.  653; 
Morrison  v.  Inhabitants,  etc.,  7  Vroom  (N.  J.),  219. 


182  EAILROAD    CORPORATIONS.  [§  135. 

that  were  issued  without  these  formalities  were  held  to  be 
void.^  As  was  said  by  the  court  in  Ilack.ensack  Water 
Co.  V.  De  Kay,  supra:  "Persons  taking  securities  of  this 
character  are  chargeable  with  knowledge  of  the  power  to 
make  them  as  conferred  by  the  charter.  If  the  power 
granted  by  the  charter  is  subject  to  a  condition,  relating 
either  to  the  form  in  which  the  security  shall  be  made  in 
order  to  be  valid,  or  to  some  preliminary  proceeding 
extraneous  to  the  acts  of  the  corporation  or  its  officers, 
securities  issued  not  in  the  prescribed  form,  or  without 
the  preliminary  proceedings  had,  are  subject  to  defenses 
in  consequence  thereof  even  in  the  hands  of  lona  fide 
holders." 

§  135.  NegotiaMUty  of  railroad  londs. —  Coupon  bonds 
of  a  railroad  company,  issued  under  special  legislative  au- 
thority and  designed  for  the  purpose  of  raising  money 
on  a  credit,  if  the}'^  contain  words  of  negotiability,  are  ne- 
gotiable instruments  the  same  as  ordinary  commercial 
paper,  and  the  same  immunity  from  defenses  in  the  hands 
of  honafide  holders  applies  to  mortgages  securing  such 
bonds  as  to  the  bonds  themselves."^  Kailroad  bonds  are 
usually  made  payable  to  the  trustee  named  in  the  mort- 
gage or  the  bearer,  and  pass  by  delivery  from  hand  to 
hand  with  all  the  ordinary  properties  of  negotiable  in- 
struments.^    Under  the  law  merchant  such  bonds  are  not 

1  Morrison  v.  Inhabitants  of  Bernards,  7  Vroom  (N.  J.),  219. 

2  Hackensack  Water  Co.  v.  De  Kay,  36  N.  J.  Eq.  548,  and  cases 
cited. 

•5  White  V.  Vermont,  etc.  R.  Co.,  21  How.  (U.  S.)  575;  Clark  v.  Iowa 
City.  20  Wall.  (U.  S.)  583;  Gelpcke  v.  Dubuque,  1  Wall.  (U.  S.)  175; 
Aurora  City  v.  West,  7  Wall.  (U.  S.)  82;  Haven  v.  Grand  Junction, 
etc.  Co.,  109  Mass.  88;  Connecticut  Life  Ins.  Co.  v.  Cleveland  R.  Co., 
41  Barb.  (N.  Y.)  9;  Reed  v.  Mobile  Bank,  70  Ala.  199;  Lehman  v.  Tal- 
lahassee Mfg.  Co.,  64  Ala.  567:  Morris  Canal  Co.  v.  Fisher,  9  N.  J.  Eq. 


§  136.]  KAILKOAD   CORPORATIONS.  183 

regarded  so  strictly  negotiable  as  are  promissory  notes 
or  bills  of  exchange;  but  being  expressly  designated  to 
pass  from  hand  to  hand,  they  are  by  common  usage  act- 
ually transferred  and  capable  of  passing  by  delivery  so  as 
to  enable  the  holder  to  maintain  an  action  on  them  in  his 
own  name.' 

§  136.  Poiver  to  guaranty  'bonds  of  another  comimny. — 
Unless  express  authority  be  given  by  charter  or  by  stat- 
ute, a  railroad  company  has  no  power  or  authority  to 
guaranty  the  bonds  of  or  lend  its  credit  to  another  corpo- 
ration.2  J3^|^  j^  j^g^g  been  held  that  on  sufficient  consider- 
ation such  corporation  may  guaranty  the  payment  of  the 
bonds  of  another  company,  even  if  there  is  no  authority 
conferred  upon  them  by  charter  or  by  statute.'^  So  it  has 
been  held  that  a  railroad  corporation  which  has  power  by 
its  charter  to  issue  its  bonds  has  power  to  guaranty  the 
bonds  of  another,  which  it  receives  in  payment  of  a  debt 

667;  Carr  v.  Le  Fevre,  27  Pa.  St.  413;  Chapin  v.  Vermont,  etc.  R.  Co., 
8  Gray  (Mass.),  575;  Langstone  v.  Southern  Carolina  R.  Co.,  3  S.  C. 
248;  Ex  parte  Williams,  18  S.  C.  299;  Bonner  v.  New  Orleans,  2  Woods 
(U.  S.),  135;  Zabrieskie  v.  Cleveland,  etc.  R.  Co.,  23  How.  (U.  S.)  381; 
Knox  County  v.  Aspinwall,  21  How.  (U.  S.)  539;  Beaver  County  v. 
Armstrong,  44  Pa.  St.  63;  Craig  v.  Vicksburg,  31  Miss.  216;  Rice  v. 
Southern  Pac.  R.  Co.,  9  Phila.  294;  Brainerd  v.  Railroad  Co.,  25  N.  Y. 
496;  Welch  v.  Sage,  47  N.  Y.  143;  Junction  R.  Co.  v.  Cleneay,  13  Ind. 
161. 

1  Carr  v.  Le  Fevre,  supra;  Junction  R.  Co.  v.  Cleneay,  supra. 

2  Humboldt  Min.  Co.  v.  American  Com.  Co.,  62  Fed.  Rep.  361;  Mor. 
Priv.  Corp.,  g  423;  McLennan  v.  File  Works,  56  Mich.  579;  ^tna  Nat. 
Bank  v.  Insurance  Co.,  50  Conn.  167;  National  Park  Bank  v.  German 
Am.  etc.  Co.,  116  N.  Y.  281;  Madison,  etc.  Plank  Road  Co.  v.  Water- 
town,  etc.  Co.,  7  Wis.  59;  Davis  v.  Railroad  Co.,  131  Mass.  258;  Cole- 
man v.  Railway  Co.,  10  •  Beav.  1 ;  Pennsylvania  R.  Co.  v.  St.  Louis, 
etc.  Co.,  118  U.  S.  290;  Marble  Co.  v.  Harvey,  92  Tenn.  115;  Green 
Bay,  etc.  Co.  v.  Steamboat  Co.,  107  U.  S.  98. 

'Low  V.  Cent.  Pac.  R.  Co.,  52  Cal.  53;  Chicago,  etc.  Co.  v.  Howard, 
7  Wall.  (U.  S.)  392;  Arnot  v.  Erie  R.  Co.,  67  N.  Y.  315. 


184:  KAILKOAD   OOKPOKATIONS.  [§  137.. 

due  to  it,  and  which  it  sells  for  value  or  transfers  in  pay- 
ment of  its  own  debt,  the  guaranty  being  given  as  the 
means  of  strengthening  and  increasing  the  credit  of  the 
bonds,  or  to  enable  it  to  obtain  an  adequate  price  for 
them,^  And  it  has  been  held  that  where  a  corporation 
guaranties  the  bonds  of  another  company,  its  stockhold- 
ers may  be  estopped  from  repudiating  the  guaranty, 
though  the  indorsement  of  guaranty  be  ultra  vires? 

§  137.  Power  to  lease  its  road  and  franchises. — ^It  is  a 
general  rule  that,  unless  specially  authorized  by  its  charter 
or  aided  by  some  other  legislative  action,  a  railroad  com- 
pany cannot,  by  lease  or  by  any  other  contract,  turn  over 
to  another  company  for  a  long  period  of  time  its  road 
and  all  its  appurtenances,  the  use  of  its  franchises  and  the 
exercise  of  its  powers,  such  contract  not  being  among  the 
ordinary  powers  of  a  railroad  company,  and  is  not  to  be 
presumed  from  the  usual  grant  of  powers  in  a  railroad 
charter.^    This  rule  is  based  on  the  theory  that  public  or 

1  Rogers  Locomotive  Works  v.  Southern  R.  Ass'n,  34  Fed.  Rep.  278. 

2Cozart  V.  Georgia,  etc.  R.  Co.,  54  Ga.  379;  Atchison,  etc.  R.  Co.  v. 
Fletcher,  35  Kan.  236. 

3  Thomas  v.  Railroad  Co.,  101  U.  S.  71;  Green  Bay,  etc.  R.  Co.  v. 
Steamboat  Co.,  107  U.  S.  98;  Davis  v.  Railroad  Co.,  131  Mass.  258; 
Eastern  Counties  R  Co.  v.  Hawkes,  5  H.  L.  331 ;  Ashbury  Ry.  v. 
Riche,  7  H.  L.  653;  Pennsylvania  R.  Co.  v.  St.  L.  etc.  R.  Co.,  118 
U.  S.  290;  Oregon  Ry.  Co.  v.  Oregonian  Ry.  Co.,  130  U.  S.  1;  Central 
Trans.  Co.  v.  Pullman  Co.,  139  U.  S.  24;  Beman  v.  Rufford,  1  Sim. 
(N.  S.)  550;  Johnson  v.  Shrewsbury,  etc.  R.  Co.,  3  De  G.,  McN.  &  G. 
914;  Shrewsbury,  etc.  R.  Co.  v.  Northwestern,  etc.  Co.,  6  H.  L.  113; 
South  Yorkshire  R.  Co.  v.  Great  Nor.  Ry.  Co.,  3  De  G.,  M.  &  G.  576; 
Winch  V.  Birkenhead  Ry.  Co.,  5  De  G.  &  Sm.  562;  Great  Nor.  R,  Co.  v. 
Railway  Co.,  9  Hare,  306;  Troy,  etc.  R.  Co.  v.  Kerr,  17  Barb.  (N.  Y.) 
601;  Ohio,  etc.  R,  Co.  v.  Indianapolis,  etc.  Co.,  5  Am.  L.  Reg.  (N.  S.) 
733;  York,  etc.  R.  Co.  v.  Winans,  17  How.  (U.  S.)  39;  Comm.  v.  Smith, 
10  Allen  (Mass.),  448;  Richardson  v.  Sibley,  11  Allen  (Mass.),  66; 
Georg  V.  Nevada  Cent.  Ry.  Co.,  38  Pac.  Rep.  (Nev.)  441;  Visalia  Gas^ 


§  137.]  KAILROAD   CORPOEATIONS.  185 

quasi-Tpuhlic  corporations,  which  possess  and  exercise  the 
right  of  eminent  domain  or  its  equivalent,  owe  duties  to 
the  public  as  well  as  to  their  stockholders ;  and  they  can- 
not sell  or  lease  their  corporate  powers  and  privileges,  and 

etc.  Co.  V.  Sims,  104  Cal.  326;  Eabe  v.  Dunlap,  51  K  J.  Eq.  40;  Stock- 
ton V.  Central  Ry.,  50  N.  J.  Eq.  53;  National  Trust  Co.  v.  Miller,  33  N. 
J  Eq.  155;  Brunswick  Gas  L.  Co.  v.  United  Gas  Co.,  85  Me.  532;  Keo- 
kuk V.  Fort  Wayne  Elec.  Co.,  57  Mo.  689;  Wasnaer  v.  Delaware,  etc. 
R.  Co.,  80  N.  Y.  312;  Abbott  v,  Johnstown,  etc.  R.  Co.,  80  id.  27; 
Dinsmore  v.  Atlantic,  etc.  R.  Co.,  46  How.  Pr.  (N.  Y.)  193;  Peters  v. 
Lincoln,  etc.  R.  Co.,  2  McCrary  (U.  S.),  275;  Ohio,  etc.  R.  Co.  v.  In- 
dianapolis, etc.  R.  Co.,  5  Am.  L.  Rep.  733;  Freeman  v.  Minnesota, 
etc.  R.  Co.,  28  Minn.  443;  Middlesex  R.  Co.  v.  Boston,  etc.  R.  Co.,  115 
Mass.  347;  Camden,  etc.  R,  Co.  v.  May's  Landing  R.  Co.,  48  N.  J.  L. 
530;"'Kean  v.  Johnson,  9  N.  J.  Eq.  407;  Black  v.  Delaware,  etc.  R.  Co., 
22  N.  J.  Eq.  130,  24  N.  J.  Eq.  455;  Clarke  v.  Omaha  R.  Co.,  4  Neb.  458; 
McMillan  v.  Mich.  So.  R.  Co.,  16  Mich.  79;  Occum  Co.  v.  Sprague  Co., 
34  Conn.  529;  Campbell  v.  Marietta  R.  Co.,  23  Ohio  St.  138;  Lauman 
V.  Lebanon  Valley  R.  Co.,  30  Pa.  St.  42;  Pinto  Co.  Case,  8  Ch.  Div. 
273;  Boston,  etc.  R.  Co.  v.  New  York,  etc.  Co.,  13  R.  L  200;  Camp- 
bell's Case,  9  Ch.  App.  1;  Simpson  v.  Westminster  Co.,  8  H.  L.  712; 
Smith  V.  St.  Louis  Ins.  Co.,  2  Tenn.  Ch.  727;  Price  v.  St.  Louis  Ins. 
Co.,  3  Mo.  App.  262;  Cozart  v.  Georgia  R.  Co.,  54  Ga.  379;  New  Or- 
leans R.  Co.  V.  Harris,  27  Miss.  517;  In  re  Albert  Ass.  Co.,  6  Ch.  App. 
381 ;  Eakin  v.  St.  Louis  R.  Co..  3  Cent.  L.  Jour.  655. 

In  Stockton  v.  Central  R.  R.  Co.,  supra,  Chancellor  McGill  says: 
"  Corporate  bodies  that  engage  in  a  public  or  quasi-pnhlic  occupa- 
tion are  created  by  the  state  upon  the  hypothesis  that  they  will  be 
a  public  benefit.  They  enjoy  privileges  that  individuals  cannot 
have.  Perpetual  or  certain  life  is  accorded  to  them.  Usually  the 
authority  of  the  right  of  eminent  domain  is  delegated  to  them, 
often  to  be  exercised  in  whatever  locality  they  may  be  pleased  to 
locate.  .  .  .  The  use  of  the  common  highways  is  frequently  sub- 
ordinated to  their  operations,  and,  indeed,  the  individual  is  com- 
pelled even  in  his  own  home  to  submit  without  redress  to  discom- 
forts incident  to  their  lawful  operation  which  he  would  not  be  re- 
quired to  tolerate  from  other  sources.  .  .  .  Thus  they  are  given 
special  privileges  because  of  the  benefits  they  are  presumed  to  con- 
fer upon  the  communities.  Railways  afford  speedy  and  comfortable 
passage  to  and  from  divers  parts  of  the  country,  carry  produce  of 


186  KAILKOAD    COKPORATIONS.  [§  137. 

thereby  disable  themselves  from  performing  their  public 
duties,  without  legislative  authority.^  Accordingl\^,  where 
a  railroad  corporation,  under  a  provision  of  its  charter 
declaring  it  to  "  be  lawful  for  the  said  company,  at  any 
time  during  the  continuance  of  its  charter,  to  make  con- 
tracts and  engagements  with  any  other  corporation,  or 
with  individuals,  for  the  transporting  or  carrying  any 
kind  of  goods,  merchandise,  freight  or  passengers,  and  to 
enforce  the  fulfillment  of  such  contract,"  leased  its  road, 
franchises  and  property  for  a  period  of  twenty  years, 
yielding  complete  control  of  it  to  the  lessees,  and  receiv- 
ing as  rent  one-half  the  gross  sura  collected  by  the  lessee 
from  the  operation  of  the  road ;  the  agreement  containing 

mines,  farms  and  factories  to  markets,  distribute  the  industries 
throughout  the  land,  feed  the  multitudes  in  populous  cities,  and  ac- 
complish many  other  beneficent  ends.  Water,  gas.  telegraph  and 
similar  corporations  also  render  to  the  public  benefits  which  readily 
suggest  themselves  to  the  mind  as  it  contemplates  their  work. 
While  the  state  confers  special  privileges  upon  these  favorites,  it  at 
the  same  time  exacts  from  them  duties  which  also  tend  to  the  pub- 
lic welfare.  The  whole  scheme  of  the  laws  of  their  organization 
is  to  equip  and  control  them  as  instruments  for  the  public  good. 
Such  corporations  hold  their  powers  not  merely  in  trust  for  the 
pecuniary  profit  of  their  stockholders,  but  also  in  trust  for  tlie  public 
weal.  The  impress  for  the  public  good  is  stamped  upon  their  very 
being,  and  it  becomes  a  duty  which,  though  not  prescribed  in  ex- 
press language  of  the  law,  is  to  be  implied  from  the  nature  of  every 
power  conferred.  When,  therefore,  it  appears  that  such  a  corpora- 
tion, unmindful  of  this  plain  duty,  acts  prejudicially  to  the  public 
in  order  to  make  undue  gains  and  profits  for  the  stockholders,  it 
uses  its  powers  in  a  manner  not  contemplated  by  the  law  which 
confers  them.  The  use  becomes  abuse,  and  is  tantamount  to  ex- 
cess of  power." 

iFietsam  v.  Hay,  123  111.  293;  People  v.  Chicago  Gas  Trust  Co., 
130  111.  268;  People  v.  Sugar  Ref.  Co.,  121  N.  Y.  582;  Brunswick  Gas- 
light Co.  V.  United  Gas,  etc.  Co.,  85  Me.  532;  City  of  Keokuk  v. 
Fort  Wayne  Elec.  Co.,  57  Mo.  689;  Visalia  Gas  &  E.  Co.  v.  Sims,  104 
CaU  326;  Mor.  Corp.,  §,^5  658,  1114,  1116,  1129. 


§  137.]  EAILROAD   COEPOEATIONS.  1S7 

a  condition  that  the  railroad  company  might  at  any  time 
terminate  the  contract  and  take  possession  of  the  prop- 
erty, and,  under  said  agreement,  did  so  take  possession, 
and  suit  was  brought  to  recover  the  value  of  the  lease  for 
the  remaining  period  of  twenty  years  to  which  the  lease 
extended, —  it  was  held  that  the  charter  did  not  grant  per- 
mission to  the  railroad  company  to  sell,  lease  or  transfer 
to  others  the  entire  railroad  and  the  rights  and  franchises 
of  the  corporation,  and  that  such  lease  of  its  road  and 
corporate  franchises  was  ultra  vires  and  void.^  So  it  was 
held  that  a  lease  for  ninety-nine  years  of  a  railroad  in 
Illinois  and  Indiana  from  a  railroad  corporation  of  In- 
diana, whose  road  connected  with  the  road  leased,  though 
within  the  authority  conferred  on  the  lessor  by  the  stat- 
ute of  Illinois,  yet  was  unlawful  and  void  because  beyond 
the  authority  conferred  upon  the  lessee  by  the  statute  of 
Indiana.^  And  again,  where  under  a  general  law  author- 
izing companies  to  organize  themselves  by  written  articles 
of  association  filed  with  the  secretary  of  state  for  "  any 
lawful  enterprise,  business,  pursuit  or  occupation  "  desig- 
nated in  the  articles,  including  "  making  or  constructing 
any  railroad,  and  to  purchase,  possess  and  dispose  of  such 
real  or  personal  property  as  ma}"  be  necessary  and  con- 
venient to  carry  into  effect  the  object  of  the  incorpora- 
tion," it  was  held  that  such  provisions  did  not  authorize  a 
railroad  company  to  be  incorporated  either  for  leasing  its 
railroad  to  another  corporation,  or  for  taking  leases  from 
other  corporations  of  their  roads,  although  these  objects 
were  included  in  their  articles  of  association.^     But  where 

1  Thomas  v.  Railroad  Co.,  101  U.  S.  71. 

2  Pennsylvania,  etc.  R.  Co.  v.  St.  Louis,  etc.  R.  Co.,  118  CJ.  S.  290. 
5  Oregon  Ry.  v.  Oregonian  Ry.,  130  U.  S.  1. 

In  Oregon  Ry.  v.  Oregonian  Ry.,  supra,  Mr.  Justice  Miller,  deliv- 
ering the  opinion  of  the  court,  says:  "One  of  the  most  important 
powers  with  which  a  corporation  can  be  invested  is  the  right  to 


188  KAILKOAD    COKPOKATIONS.  [§  137. 

a  railroad  company  by  its  charter  had  power  "  to  have, 
purchase,  possess,  enjoy  and  retain  lands,  rents,  here- 
ditaments, tenements,  goods,  chattels  and  effects  of  what- 
soever kind,  nature  or  quality  the  same  may  be,  and  the 
same  to  sell,  grant,  demise,  alien  or  dispose  of,"  which 
power  was  transferred  to  another  company,  which  com- 
pan}'-  by  its  charter  might  at  any  time  incorporate  its 
stock  with  the  stock  of  any  other  company,  it  was  held 
that  the  latter  company  had  express  power  to  incorporate 
its  stock  with  the  stock  of  any  other  company,  and  that 
the  sale  of  its  road,  equipment  and  franchises  was  not 
ultra  vires,  but  lawful  and  void.^     So  also,  on  the  same 

sell  out  its  whole  property  together  with  the  franchises  under 
which  it  is  operated,  or  the  authority  to  lease  its  property  for  a 
long  term  of  years.  In  the  case  of  a  railroad  company  these  privi- 
leges .  .  .  would  be  the  most  important  which  could  be  given 
it,  and  this  idea  would  impress  itself  upon  the  legislature.  Natu- 
rally we  would  look  for  the  power  to  do  these  things  in  some  ex- 
press provision  of  law.  We  would  suppose  that  if  the  legislature 
saw  fit  to  confer  such  rights,  it  would  do  so  in  terms  which  could 
not  be  misunderstood.  To  infer,  on  the  contrary,  that  it  either  in- 
tended to  confer  them  or  to  recognize  that  they  already  existed  by 
the  simple  use  of  the  word  'assigns,'  a  very  loose  and  indefinite 
term,  is  a  stretch  of  the  power  of  the  court  in  making  implications 
which  we  do  not  feel  to  be  justified." 

1  Branch  v.  Jessup,  16  Otto  (U.  S.),  468. 

In  Branch  v.  Jessup,  siipra,  Mr.  Justice  Bradley  says:  "Gener- 
ally the  power  to  sell  and  dispose  has  reference  only  to  the  trans- 
actions in  the  ordinary  course  of  business  incident  to  a  railroad 
company,  and  does  not  extend  to  a  sale  of  the  railroad  itself,  or  of 
the  franchise  connected  therewith.  Outlying  lands  not  needed  for 
railroad  uses  may  be  sold.  Machinery  and  other  personal  prop- 
erty may  be  sold.  But  the  road  and  franchises  are  generallj- 
inaiienable;  and  they  ai'e  so  not  only  because  they  are  acquired 
by  legislative  grant,  or  in  the  exercise  of  special  authority  given 
for  the  specific  purposes  of  the  incorporating  act,  but  because 
they  are  essential  for  the  fulfillment  of  those  purposes;  and  it 
would  be  a  dereliction  of  the  duty  owed  by  the  corporation  to  the- 
state  and  to  the  public  to  part  with  them." 


§§  138,  130.]  KAILROAD   CORPORATIONS.  189 

principle,  where  an  electric  light  and  gas  company  has 
a  franchise  granted  by  a  municipal  corporation  to  operate 
its  gas  and  electric  works  and  to  supply  the  inhabitants 
of  the  city  with  gas  and  electricity,  it  is  bound  to  operate 
its  gas  and  electric  works,  and  a  lease  thereof  to  a  third 
party  for  a  period  of  years  is  tdtra  vires  and  void  as  against 
public  policy.^ 

§  138.  Vltra  vires  lease  will  not  he  set  aside  at  suit  of 
lessor. —  A  lease,  however,  by  one  railroad  corporation  of 
its  road  and  franchises  to  another  railroad  corporation 
which  is  ultra  vires  of  one  or  of  both  will  not  be  set  aside 
by  a  court  of  equity  at  the  suit  of  the  lessor,  where  the 
lessee  has  been  in  possession,  paying  the  stipulated  rent 
for  a  number  of  years,  and  has  taken  no  steps  to  repudi- 
ate or  rescind  the  contract.^  This  relief  is  denied  under 
the  general  rule  that  in  pari  delicto  potior  est  conditio  de- 
fendentis;  and  therefore  neither  party  to  an  illegal  con- 
tract will  be  aided  by  the  court,  whether  to  enforce  it  or 
to  set  it  aside.  If  the  contract  is  illegal,  affirmative  relief 
against  it  will  not  be  granted,  at  law  or  in  equity,  unless 
it  remains  executory,  or  unless  the  parties  are  considered 
not  in  equal  fault,  or  where  there  has  been  fraud  or  op- 
pression on  the  part  of  the  defendant.^ 

§  139.  Instances  tvliere  power  to  lease  denied. —  Where 
the  charter  of  a  corporation  only  empowers  it  to  sell  the 

1  Visalia  Gas  &  E.  L.  Co.  v.  Sims,  104  Cal.  326. 

2  St.  Louis  R  Co.  V.  Terre  Haute  R.  Co.,  145  U.  S.  393;  Thomas  v. 
Railroad  Co.,  101  U.  S.  71;  Pennsylvania,  etc.  R.  Co.  v.  St,  Louis,  etc. 
R.  Co.,  118  U.  S.  290,  630;  Oregon  Ry.  v.  Oregonian  Ry.,  130  U,  S.  1; 
Central  Trans.  Co.  v.  Pullman  Co.,  139  U.  S.  24. 

3  St.  Louis  R.  Co.  V.  Terre  Haute  R.  Co.,  145  U.  S.  393;  Thomas  v. 
Richmond,  12  Wall.  (U.  S.)  349,  355;  Spring  Co.  v.  Knowlton,  103 
U.  S.  49;  Story,  Eq.  Jur.,  Ji  298;  Penn.  R.  Co.  v.  St.  Louis  R.  Co.,  118 
U.  S.  290;  Union  Trust  Co.  v.  Illinois,  etc.  Co.,  117  U.  S.  434. 


190  EAILEOAD   OOEPOEATIONS.  [§  140. 

real  estate  necessary  for  the  transaction  of  its  business 
when  not  required  for  the  uses  of  the  corporation,  it  can- 
not lease  such  real  estate  nor  maintain  an  action  for  rent 
under  the  lease,  such  leasing  not  being  necessary  to  the 
exercise  of  the  purposes  for  which  the  charter  was  given.'' 
An  unauthorized  lease  made  by  the  officers  of  a  corpora- 
tion is  void,  and  the  acquiescence  of  the  corporation  is  not 
to  be  inferred  from  silence  merely.^  So  directors  of  one 
company,  who  are  also  directors  of  another  which  owns 
two-fifths  of  the  stock  of  the  former,  cannot  properly 
vote  to  lease  the  former  company  to  the  latter.^  The 
holders  of  a  majority  of  the  capital  stock  of  a  corpora- 
tion, by  their  votes  in  a  stockholders'  meeting,  cannot 
lawfully  authorize  the  officers  to  lease  its  property  to 
themselves,  or  to  another  corporation  formed  for  the  pur- 
pose, and  exclusively  owned  by  them,  unless  such  lease  is 
made  in  good  faith  and  is  supported  by  an  adequate  con- 
sideration.* 

§  140.  Power  to  mortgage  its  road  and  property. —  The 
broad  rule  that  the  poAver  of  a  corporation  to  mortgage 
its  property  is  dependent  upon  the  general  right  of  dis- 
posal *  cannot  be  applied  to  railroad  or  other  quasi-ijuhlic 
corporations,  as  by  this  means  they  could  abandon  the 
duties  they  owe  to  the  public  and  disable  themselves  from 
such  performance.  The  power  to  mortgage,  like  a  power 
to  lease  the  property  and  franchises  of  a  railroad  corpo- 
ration, must  be  given  by  charter  or  by  statute.® 

1  Metropolitan  Concert  Co.  v.  Abbey,  52  N.  Y.  Sup.  Ct.  97. 

2  Kersey  Oil  Co.  v.  Oil  Creek  R  Co.,  12  Phila.  (Pa.)  374 

3  Bill  V.  Western  U.  Tel.  Co.,  16  Fed.  Eep.  143. 

4  Meeker  v.  Winthrop  Iron  Co.,  17  Fed.  Rep.  48. 

5  g§  83,  84  ab  ante. 

*See  §  137  and  cases  cited. 


§  141.]  KAILKOAD   COKPOEATIONS.  191 

§  141.  Power  to  mortgage  or  transfer  its  franchises. — 
It  is  now  well  settled  that  a  railroad  corporation  cannot 
mortgage,  sell  or  transfer  its  franchises  unless  express 
authority  is  given  so  to  do.^  This  power  is  denied  on  the 
hypothesis  that  a  corporation  is  an  artificial  being  which 
only  the  law  can  create,  and  when  created  it  cannot  trans- 
fer its  own  existence  into  another  body,  nor  can  it  enable 
natural  persons  to  act  in  its  name,  save  as  its  agents  or 
as  members  of  the  corporation  acting  in  conformity  with 
the  modes  required  or  allowed  by  its  charter.^  As  a  con- 
sequence of  this  principle,  the  franchise  of  a  corporation 
cannot  be  levied  upon  by  execution,  although  the  prop- 
erty of  the  corporation  maybe  taken.'  "Where  authority 
to  mortgage  its  franchises  by  a  corporation  is  given,  such 
authority  necessarily  implies  the  power  to  bring  the  fran- 
chises so  mortgaged  to  sale,  and  to  transfer  thera  with 
the  corporeal  property  of  the  company  to  the  purchaser.'* 
Where  a  mortgage  or  transfer  of  franchises  is  made,  how- 
ever, without  legislative  authority,  it  may  be  ratified  by 
subsequent  enactment,  and  such  ratification  in  reality  con- 
stitutes a  g-rant  of  franchises.'  There  has  been  a  distinc- 
tion  declared,  however,  between  a  franchise  to  he  a  corjyo- 
ration  and  a  franchise  as  a  corporation  to  maintain  and 

I Thomp. Corp., §§6137-6144;  Beach,  Priv. Corp., §389;  Home  v.Free- 
man,  14  Gray  (Mass.),  566;  Shaw  v.  Norfolk  Ry.,  5  Gray  (Mass.),  162-, 
Staten  v.  Morgan,  28  La.  Ann.  482.     And  see  cases  cited  in  §  137. 

2  See  cases  in  preceding  note. 

3Gue  V.  Canal  Co.,  24  How.  (U.  S.)  257;  Randolph  v.  Larned,  27  N. 
J.  Eq.  557;  Stewart  v.  Jones,  40  Mo.  140;  Susquehanna  Canal  Co.  v. 
Bonham,  9  W.  &  S.  (Pa.)  27. 

4  New  Orleans,  etc.  Co.  v.  Delamore,  114  U.  S.  501;  Memphis  R.  Co. 
%'.  Commissioners,  112  U.  S.  609,  623;  Galveston  v.  Cowdrey,  11  Wall. 
(U.  S.)  459. 

s  8  Am.  &  Eng.  Ency.  Law,  634d;  Richards  v.  Merrimack  R.  Co.,  44 
N.  H.  127;  Shaw  v.  Norfolk  Co.,  5  Gray  (Mass.),  162;  Pollard  v.  Mad- 
dox,  28  Ala.  321. 


192  EAILEOAD   COEPOEATIONS.  [§  142. 

ojperate  a  railway ;  the  latter  may  be  mortgaged  without 
the  former,  and  may  pass  to  a  purchaser  at  a  foreclosure 
sale.  But  such  mortgage  confers  no  right  upon  purchas- 
ers at  foreclosure  sale  to  exist  as  the  same  corporation; 
if  it  confers  any  right  of  corporate  existence  upon  them, 
it  is  only  a  right  to  reorganize  as  a  corporation,  subject 
to  laws  existing  at  the  time  of  reorganization.^ 

§  142.  Consolidation  and  amalgamation — Definition. — 
The  "  consolidation "  of  a  corporation  has  been  defined 
to  be  "  a  surrender  of  the  old  charters  by  the  companies, 
the  acceptance  thereof  by  the  legislature,  and  the  forma- 
tion of  a  new  corporation  out  of  such  portions  of  the  old 
as  enter  into  the  new."  ^  The  more  modern  understand- 
ing of  a  consolidation;  however,  might  be  better  stated 
by  saying  that  when  the  rights,  franchises  and  effects  of 

1  Memphis  R.  Co.  v.  Commissioners,  113  U.  S.  609;  Railroad  Co.  v. 
Georgia,  98  U.  S.  359;  Eldridge  v.  Smith,  34  Vt.  484. 

In  Eldridge  v.  Smith,  supra,  the  court  say:  "  When  a  railroad  com- 
pany mortgages  its  road  and  appurtenances  as  a  security  for  debt, 
and  also  its  franchise,  it  is  not  to  be  understood  as  conveying  its 
corporate  existence  or  its  general  corporate  powers,  but  only  the 
franchise  necessary  to  make  the  conveyance  productive  and  bene- 
ficial to  the  grantees,  to  maintain  and  support,  manage  and  operate 
the  railroad,  and  receive  the  tolls  and  profits  therefor  for  their  own 
benefit.  If  it  were  held  that  all  the  corporate  franchises,  including 
the  power  of  corporate  existence,  were  conveyed  by  the  mortgage, 
the  conclusion  would  seem  to  be  logical  that,  on  breach  and  fore- 
closure, the  mortgagees  would  step  into  the  shoes  of  the  company 
and  merely  succeed  to  their  rights  in  the  property,  and  also  to  their 
corporate  liabilities  —  a  result  by  no  means  favorable  to  their  inter- 
ests. Or,  if  it  wex'e  held  that  the  mortgagees  did  not  succeed  to  the 
corporate  existence  and  functions  of  the  railroad  company,  and  that 
they  did  not  remain  in  the  company,  then  it  must  operate  as  a  dis- 
solution of  the  company,  and  lands  taken  compulsorily  for  their  road 
would  revert  to  the  owners  in  fee." 

estate  V.  Bailey,  16  Ind.  46;  Lauman  v.  Lebanon  Valley  R.  Co.,  30 
Pa.  St.  42. 


§  142.]  EAILROAD   COKPOKATIONS.  193 

two  or  more  corporations  are  by  legal  authority  and 
agreement  of  the  parties  combined  and  united  into  one 
^vhole,  and  committed  to  a  single  corporation,  the  stock- 
holders of  which  are  composed  of  those  of  the  companies 
thus  agreeing,  this  is  in  law  a  consolidation,  whether 
the  consolidated  company  be  a  new  one  then  created,  or 
one  of  the  original  companies  continuing  in  existence 
with  only  larger  rights,  capacities  and  property.^  "  Amal- 
gamation "  has  been  declared  to  be  when  the  existing 
companies  agree  to  abandon  their  respective  articles  of 
association  and  regulation,  and  to  register  themselves 
under  new  articles  as  one  body.  This  w^ould  be  a  new 
company  formed  by  the  coalition  or  amalgamation  of  the 
companies  previously  existing.^  The  expression  "amal- 
gamation," however,  is  of  English  origin,  has  never  ap- 
pealed to  the  judicial  sense  of  this  country,  and  is  seldom 
used  to  designate  the  union  of  two  or  more  corporations, 
the  word  "  consolidation  "  being  the  term  in  common  use.^ 

1  Meyer  v.  Johnston,  64  Ala.  603;  Houston  &  Tex.  Cent.  R.  R.  v. 
Shirley,  54  Tex.  135,  4  Am.  &  Eng.  Ency.  of  Law,  272. 

2  In  re  Bank  of  Hindustan,  2  Hen.  &  M.  66,  L.  R.  5  Ch.  400;  Clinch 
V.  Financial  Corp.,  4  Ch.  App.  117;  In  re  Empire  Assurance  Corp., 
L.  R.  4  Eq.  341. 

3  In  Meyer  v.  Johnston,  supra.  Manning,  J.,  in  discussing  the  adop- 
tion of  the  word  "amalgamate,"  says:  "In  its  origin  and  use  it  is 
peculiarly  technical.  It  pertains  especially  to  the  arts,  and  belongs 
to  the  language  of  physical  science;  and  inasmuch  as  by  amalgama- 
tion, as  ordinarily  understood,  a  material  product  results  which,  by 
transfusion  into  it  of  the  properties  and  qualities  of  the  two  or  more 
material  things  from  whose  union  it  proceeds,  partakes  of  the  nature 
of  each,  and  is  yet  unlike  either,  it  is  not  surprising  that  English 
judges  have  had  trouble  in  perceiving  the  appropriateness  of  the 
word  to  not  a  few  of  the  cases  of  united  corporations  that  have 
come  before  them.  When  jjarties  and  parliament,  in  providing  for 
the  union  of  two  or  more  corporations,  passed  by  familiar  words 
that  were  not  inapplicable,  and  have  a  broader  meaning  —  such  as 
combination,  conjunction,  association,  union,  coalition,  consolida- 

13 


194:  KAILROAD    CORPORA TIONS,  [§  143, 

§  143.  Tower  of  companies  to  consolidate. —  It  is  well 
settled  that  corporations  can  only  consolidate  with  the 
consent  and  authority  of  the  legislature.^  Such  authority 
to  consolidate  mav  be  conferred  in  the  orifjinal  charter,^  or 
by  the  provisions  of  a  general  or  special  act  of  the  legis- 
lature,^ or,  it  has  been  held,  even  by  the  express  sanction 
of  an  unauthorized  agreement.''  But  such  consolidation 
to  be  valid  must  obtain  the  assent  of  the  legislature  either 
by  express  grant  or  necessary  implication.'^  Accordingl}^, 
it  was  held  in  a  leading  American  case  that  where  two 
separate  corporations  were  created  to  build  railroads,  they 
had  no  right,  without  express  authority,  to  unite  and  con- 
duct their  business  under  one  management,  nor  to  estab- 
lish a  steamboat  line  to  run  in  connection  with  railroads.® 
So,  in  the  absence  of  authority  conferred  by  the  charter,^ 
an  agreement  between  directors  of  corporations  to  con- 
solidate and  merge  the  two  into  a  new  corporation  is 
ultra  vires,  although  such  invalid  agreement  has  been 
partly  performed.'^ 

tion  —  and  selected,  as  expressive  of  their  purpose,  so  technical  a 
term  as  'amalgamation,'  judges  felt  constrained  to  preserve,  as  far 
as  possible,  its  original  and  peculiar  signification,  in  their  new  ap- 
plication of  it  to  legal  subjects." 

1  International  R.  Co.  v.  Bremond,  53  Tex.  96;  Charlton  v.  New- 
Castle  R.  Co.,  5  Jur.  (N.  S.)  1096;  State  v.  Bailey,  16  Ind.  46;  Central 
Ry.  Co.  V.  Georgia,  40  Ga.  583;  s.  C,  93  U.  S.  665;  State  v.  Green  Co., 
54  Mo.  540;  Denike  v.  Lime  Co.,  80  N.  Y.  599;  s.  C,  5  Fed.  Rep.  19; 
Shields  v.  Ohio,  95  U.  S.  319;  Sharon  Coal  Co.  v.  Fulton  Bank,  7  Wend. 
413;  Pearce  v.  Madison  R.  Co.,  21  How.  (U.  S.)  441. 

2  Nugent  V.  Supervisors,  19  Wall.  (U.  S.)  341. 

3  Bishop  V.  Brainerd,  38  Conn.  389;  Black  v.  Canal  Co.,  22  N.  J.  Eq. 
130;  Southall  v.  Insurance  Co.,  L.  R.  11  Eq.  65. 

4McAuley  v.  Columbus  R.  Co.,  83  111.  348;  Mead  v.  N.  Y.  etc.  R 
Co.,  45  Conn.  199. 
&  Fisher  v.  Evansville  R.  Co.,  7  Ind.  407. 
6  Pearce  v.  Madison,  etc.  R.  Co.,  31  How.  (U.  S.)  441. 
^  Greenville  Compress  v.  Planters"  Press,  70  Miss.  669. 


§  14:4.]  KAILROAD   CORPOEATIONS.  195 

§  144.  Uffect  of  consolidation. —  The  effect  of  consoli- 
dating two  or  more  corporations  has  been  variously  stated 
by  different  courts.  Declaring  that  one  of  the  companies 
loses  its  actual  identity,  abandons  its  name,  and  therefore 
its  legal  identity  and  its  corporate  existence,  and  can  no 
longer  claim  any  legal  recognition ;  that  such  a  merger  is 
a  dissolution  destroying  the  actual  identity  of  both,  while 
the  legal  identity  of  one  of  them  is  preserved.^  That  such 
consolidation  or  amalgamation  works  a  dissolution  of  the 
corporations  previously  existing,  and  at  the  same  instant 
creates  a  new  corporation,  with  property,  liabilities  and 
stockholders  derived  from  those  passing  out  of  existence."^ 

1  Lauman  v.  Lebanon  Valley  R.  Co.,  30  Pa.  St.  42. 

2  Miller  &  Mississippi,  etc.  R.  Co.  v.  Lancaster,  5  Coldvv.  (Tenn.)  514; 
Clearwater  v.  Meredith,  1  Wall.  (U.  S.)  40;  Mowrey  v.  Indiana,  etc. 
R.  Co.,  4  Biss.  (U.  S.)  85:  State  v.  Railroad  Co..  66  Me.  488;  Shields  v. 
Ohio,  95  U.  S.  334;  Railroad  Co.  v.  Georgia,  98  U.  S.  359:  Central  R. 
Co.  V.  Georgia,  93  U.  S.  665;  State  v.  Sherman,  32  Ohio  St.  411;  State 
ex  rel.  Wine  v.  Keokuk,  etc.  R.  Co.,  99  Mo.  30;  Maine  Cent.  R.  Co. 
V.  Maine,  96  U.  S.  499;  Atlantic,  etc.  R.  Co.  v.  State,  55  Ga.  312; 
Railway  Co.  v.  Berry,  113  U.  S.  465;  Memphis,  etc.  R.  Co.  v.  Railroad 
Comm.,  112  U.  S.  609:  Railroad  Co.  v.  Palmes,  109  U.  S.  244;  Keokuk, 
etc.  R.  Co.  V.  State,  153  U.  S.  301;  Edison  E.  L.  Co.  v.  New  Haven 
E.  L.  Co.,  35  Fed.  Rep.  233;  Bank  v.  Colby,  21  Wall.  (U.  S.)  609;  Pom- 
eroy  v.  Bank,  1  Wall.  (U.  S.)  23;  Racine  R.  Co.  v.  Farmers'  L.  &  T. 
Co.,  49  111.  331;  Houston  R.  Co.  v.  Shirley,  54  Tex.  125;  Ferguson  v. 
Meredith,  1  Wall.  (U.  S.)  35;  Fee  v.  Gas  Co.,  35  La.  Ann.  413;  Gas  Co. 
V.  Manufacturing  Co.,  115  U.  S.  697. 

In  Railroad  Co.  v.  Georgia,  98  U.  S.  359,  Mr.  Justice  Strong,  in  re- 
ferring to  the  act  under  which  the  respective  companies  were  em- 
powei'ed  to  consolidate  their  stocks,  and  discussing  the  effect  of 
such  consolidation,  said: 

"It  is  conceded  that  under  this  act  a  consolidation  took  place.  It 
is  therefore  a  vital  question,  What  was  its  effect?  Did  the  consoli- 
dated companies  become  a  new  corporation,  holding  its  powers  and 
privileges  as  such  under  the  act  of  1863?  Or  was  the  consolidation 
a  mere  alliance  between  two  pre-existing  corporations,  in  which 
each  preserved  its  identity  and  distinctive  existence?     Or,  still  fur- 


lOG  EAILKOAD   COErOKATIONS.  [§  144. 

That  the  effect  of  consolidation  upon  former  companies, 
except  so  far  as  the  contrary  may  be  provided  by  statute, 
is  to  dissolve  all  the  old  corporations  and  to  create  a  new 
one,  assuming  the  liabilities  and  succeeding  to  the  rights 

ther,  was  it  an  absorption  of  one  by  another,  whereby  the  former 
was  dissolved,  while  the  latter  continued  to  exist?  The  answer  to 
these  inquiries  must  be  found  in  the  intention  of  the  legislature  as 
expressed  in  the  consolidating  act.  We  think  that  intention  was 
the  creation  of  a  new  corporation  out  of  the  stockholders  of  the  two 
previously  existing  companies.  The  consolidation  provided  for  was 
clearly  not  a  merger  of  one  into  the  other,  as  was  the  case  of  Cen- 
tral Railroad  &  Banking  Co,  v.  Georgia,  93  U.  S.  665.  Nor  was  it  a 
mere  alliance  or  confederation  of  the  two.  If  it  had  been,  each 
would  have  preserved  its  separate  existence  as  well  as  its  corporate 
name.  But  the  act  authorized  the  consolidation  of  the  stocks  of  the 
two  companies,  thus  making  one  capital  in  place  of  two.  It  con- 
templated, therefore,  that  the  separate  capital  of  each  company 
should  go  out  of  existence  as  the  capital  of  that  company;  and,  if 
so,  how  could  either  have  a  construed  separate  being?  True,  the 
proviso  to  the  first  section  declared  that  nothing  therein  contained 
should  relieve  or  discharge  either  of  the  companies  from  any  con- 
tract theretofore  entered  into  by  either,  adding:  'But  this  company 
(that  is,  the  company  created  by  the  act)  shall  be  liable  on  the 
same,' 

"It  is  thus  distinguished  between  the  two  original  companies  and 
the  one  contemplated  to  be  formed  by  this  consolidation.  And  the 
proviso  would  have  been  quite  unnecessary  had  it  not  been  thought 
by  the  legislature  that  the  consolidation  would  work  a  dissolution 
of  the  amalgamated  companies.  Hence  it  was  considered  necessary 
to  preserve  the  rights  of  parties  who  might  have  contracted  with 
them.  Only  their  contracts  were  mentioned  in  the  proviso,  and 
that  in  order  to  authorize  a  novation.  .  .  .  Looking  thus  at  the 
legislative  intent  appearing  in  the  consolidation  act,  we  are  con- 
strained to  the  conclusion  that  a  new  corporation  was  created  by 
the  consolidation  effected  thereunder  in  the  place  and  in  lieu  of  the 
two  companies  previously  existing,  and  that  whatever  franchises, 
immunities  or  privileges  it  possesses  it  holds  them  solely  by  virtue 
of  the  grant  that  act  made.  That  generally  the  effect  of  consolida- 
tion, as  distinguished  from  a  union  by  merger  of  one  company  into 
another,  is  to  work  a  dissolution  of  the  companies  consolidating. 


§  144.]  EAILKOAD    CORPOEATIONS.  197 

of  the  old  companies.^  That  the  consolidation  of  two 
companies  does  not  necessarily  work  a  dissolution  of 
both,  and  the  creation  of  a  new  corporation.  "Whether 
such  be  its  effect  is  dependent  upon  the  legislative  intent 
manifested  in  the  statute  under  which  the  consolidation 
takes  place.^  That  consolidation  is  not  a  sale,  and  when 
two  companies  are  authorized  to  consolidate  their  roads 
it  is  to  be  presumed  that  the  franchises  and  privileges  of 
each  continue  to  exist  in  respect  to  the  several  roads  so 
consolidated.'  And  that  upon  such  consolidation  the  busi- 
ness of  the  old  corporations  is  not  wound  up,  nor  their 
property  sequestered  or  disturbed;  but  the  very  object 
of  the  consolidation,  and  of  the  statutes  which  permit  it, 
is  to  continue  the  business  of  the  old  corporation.  Whether 

and  to  create  a  new  corporation  out  of  the  elements  of  the  former, 
is  asserted  in  many  cases,  and  it  seems  to  be  a  necessary  result.  .  .  . 
When  as  in  this  ease  the  stock  of  two  companies  is  consolidated, 
the  stockholders  become  partners,  or  gitasi-partners,  in  a  new  con- 
cern. Each  set  of  stockholders  is  shorn  of  the  power  which,  as  a 
body,  it  had  before.  Its  action  is  controlled  by  a  power  outside  of 
itself.  To  illustrate:  The  stockholders  of  the  Savannah  &  Albany 
Eailroad  Company  could  not,  after  consolidation,  have  exercised 
any  of  the  powers  or  franchises  they  had  prior  to  their  consolida- 
tion with  the  stockholders  of  the  Atlantic  &  Gulf  Eailroad  Com- 
pany. They  could  not  have  built  their  road  or  controlled  its  man- 
agement. They  could  not,  therefore,  have  performed  the  duties 
which  by  their  original  charter  were  imposed  upon  them.  .  .  . 
Their  powers,  their  franchises  and  their  privileges  were  therefore 
gone,  no  longer  capable  of  exercise  or  enjoyment.  Gone  where? 
Into  the  new  organization,  the  consolidated  company,  which  exists 
alone  by  virtue  of  the  legislative  grant,  and  which  has  all  its  pow- 
ers, facilities  and  privileges  by  virtue  of  the  consolidation  act." 

iMcMahan  v.  Morrison,  18  Ind.  172;  Paine  v.  Lake  Erie,  etc.  Co., 
31  Ind,  283;  Zimmer  v.  State,  30  Ark.  677;  Robertson  v.  Rockford, 
21  111.  451;  Railroad  Co.  v.  Maine,  96  U.  S.  499;  Thompson  v.  Abbott, 
61  Mo.  176;  Cliicago,  etc.  Co.  v.  Moffitt,  75  111.  524. 

2  Central  R.  Co.  v.  Georgia,  92  U.  S.  665. 

3  Green  Co.  v.  Conness,  109  U.  S.  104. 


198  KAILEOAD   CORPORATIONS.  [§  145. 

the  old  corporations  are  dissolved  in  the  new  corporation, 
or  are  continued  in  existence  under  a  new  name  and  with 
new  powers,  and  whether  in  either  case  the  consolidated 
company  takes  the  property  of  each  of  the  old  corpora- 
tions charged  with  a  lien  for  the  payment  of  the  debts 
of  that  corporation,  depends  upon  the  terms  of  the  agree- 
ment of  consolidation  and  the  statutes  under  whose  au- 
thority the  consolidation  is  effected.^ 

§145.  Effect  of  interstate  consolidation. —  In  general, 
the  status  of  a  consolidated  company,  formed  by  the 
union  or  consolidation  of  two  or  more  companies  of  dif- 
ferent states,  is  an  association  incorporated  in  and  by  each 
of  the  states,  and  where  acting  as  a  corporation  in  either 
of  the  states,  it  acts  under  the  authority  of  the  charter  of 
the  state  in  which  it  is  then  acting,  and  that  onl}^  the 
legislation  of  the  other  states  having  no  operation  beyond 
its  territorial  limits.-  Nor  does  the  consolidation  of  the 
stock  of  two  companies  of  different  states  constitute  the 
corporations  thus  consolidated  one  corporation  of  both 
states,  or  of  either,  but  the  corporation  of  each  state  con- 
tinues a  corporation  of  the  state  of  its  creation,  although 
the  same  persons,  as  officers  and  directors,  manage  and 
control  both  corporations  as  one  body.  Such  a  consoli- 
dation does  not  convert  the  respective  corporations  into 
one  company  in  the  same  way  and  to  the  same  degree 
that  might  follow  a  consolidation  of  two  companies  within 
the  same  state.*     So,  where  two  corporations  of  different 

1  Wabash,  St.  Louis,  etc.  Co.  v.  Ham,  114  U.  S.  587. 

2Quincy  Bridge  Co.  v.  Adams  Co.,  88  111.  615;  Attorney-General  v, 
Boston,  etc.  R.  Co.,  109  Mass.  99;  Bridge  Co.  v.  Metz,  33  N.  J.  L.  199; 
McGregor  v.  Erie,  etc.  E.  Co.,  35  N.  J.  L.  115,  Id.  89;  Chicago,  etc. 
Co.  V.  Chicago,  etc.  R.  Co.,  6  Biss.  219;  Sprague  v.  Hartford,  etc.  Co., 
5  R.  I.  233. 

^Racine,  etc.  R.  Co.  v.  Farmers,'  etc.  Co.,  49  IlL  331;  Ohio,  etc.  R. 


§  140.]  KAILEOAD  CORPOKATIOXS.  199 

states  are  consolidated  b}^  virtue  of  acts  of  assembly  of 
the  two  states,  the  consolidated  company  is  subject  to  the 
control  of  each  state  as  far  as  concerns  its  property  and 
business  therein,^  and  is  to  be  treated  in  each  state  as  a 
domestic  corporation.'^  And  where  two  corporations  of 
different  states  are  consolidated  under  lawful  authority, 
one  of  which  was  subject  in  one  state  to  a  mortgage  prior 
to  such  consolidation,  the  courts  of  the  other  state  do  not 
thereby  acquire  jurisdiction  so  as  to  enforce  a  foreclosure 
of  the  mortgage.* 

§  146.  Bights  and  liahilities  of  consolidated  company. — 
As  a  general  rule  a  consolidated  company  has  all  the 
rights  and  powers  and  is  subject  to  all  the  liabilities  of 
the  various  corporations  of  which  it  may  be  composed.* 
Accordingly,  it  may  take  advantage  of  all  contracts  and 

Co.  V.  Wheeler,  1  Blackf.  (U.  S.)  297;  Farnum  v.  Canal  Co.,  1  Sumn. 
<U.  S.)  46;  Delaware  Tax  Cases,  18  Wall.  (U.  S.)  206. 

1  Peck  V.  Chicago  &  N.  W.  R.  Co.,  94  U.  S.  164. 

^  Sage  V.  Lake  Shore,  etc.  R.  Co.,  70  N.  Y.  220. 

3  Eaton,  etc.  Co.  v.  Hunt,  20  Ind.  4r)7. 

4  Philadelphia  v.  Ridge  Ave.  etc.  R.  Co.,  143  Pa.  St.  444,  102  Pa.  St. 
190;  Root  V.  Oil  Creek,  etc.  Co.,  31  Pliila.  Leg.  140;  Lake  Shore,  etc. 
Co.  V.  Hutchins,  37  Ohio  St.  282;  Coyley  v.  Coburg,  etc.  Co.,  14  Grant's 
€as.  (Pa.)  571;  Cashman  v.  Brownlee,  128  Ind.  266;  Ridge  Ave.  etc. 
Co.  V.  Philadelphia,  124  Pa.  St.  219;  McAlpine  v.  Union  Pac.  Co.,  23 
Fed.  Rep.  168,  129  U.  S.  305;  Warren  v.  Mobile,  etc.  Co.,  49  Ala.  582; 
New  Bedford,  etc.  Co.  v.  Old  Colony  Co.,  120  Mass.  397;  Marsh  v.  New 
York,  etc.  Co.,  45  Conn.  199;  Paine  v.  Lake  Erie,  etc.  Co.,  31  Ind.  283; 
Chicago,  etc.  Coal  Co.  v.  Hall,  34  N.  E.  Rep.  704;  Western,  etc.  Co.  v. 
Smith,  75  111.  497;  Joy  v.  St.  Louis,  138  U.  S.  1;  Whipple  v.  Union 
Pac.  R.  Co.,  28  Kan.  474;  Louisville,  etc.  Co.  v.  Boney,  117  Ind.  501; 
Cleveland,  etc.  Co.  v.  Prewitt.  33  N.  E.  Rep.  367;  Indianapolis,  etc, 
€o.  V.  Jones,  29  Ind.  465;  Columbus,  etc.  Co.  v.  Powell,  40  Ind.  37; 
Chicago,  etc.  Co.  v.  Moffitt,  75  111.  524;  Coggin  v.  Central  R.  Co.,  63 
Ga.  685;  State  v.  Baltimore,  etc.  R.  Co.,  77  Md.  489;  Northern  Cent. 
R.  Co.  V.  Drew,  3  Woods  (U.  S.),  391;  Smith  v.  Los  Angeles,  etc.  Co., 
78  Cal.  289. 


200  EAILROAD  COEPOEATIONS.  [§  14T. 

enforce  all  debts  of  the  old  companies.^  So  a  consolidated 
company  is  liable  for  all  torts  committed  by  the  compa- 
nies of  Avhich  it  is  composed,  prior  to  consolidation.-  The 
presumption  is,  however,  that  where  two  companies  are 
consolidated,  each  of  them  will  be  respectively  held  with 
the  privileges  and  burdens  originall}^  attaching  thereto, 
unless  the  contrary  is  expressed.^  But  where  one  corpo- 
ration goes  entirely  out  of  existence  by  being  consolidated 
or  merged  into  another,  and  no  arrangements  are  made 
respecting  the  property  and  liabilities  of  the  extinguished 
corporation,  the  newly-created  one  will  be  entitled  to  all 
the  property.*  And  where  the  indebtedness  of  an  old 
company  has  not  ripened  into  a  lien,  the  effect  of  consoli- 
dation with  another  is  to  release  the  former  of  all  in- 
debtedness where  the  latter  becomes  the  proprietor  of 
the  property  and  franchises  of  the  former.'^ 

§  147.  Consolidation  as  affecting  stockholders. —  As  a 
general  rule  stockholders  are  not  bound  by  an  act  of  con- 
solidation without  their  consent.^    The  relation  between 

1  Atchison,  etc.  R.  Co.  v.  Commissioners,  25  Kan.  261;  NianticSav. 
Bank  v.  Douglas,  5  111.  App.  579;  Powell  v.  North.  Mo.  R.  R.  Co.,  4^ 
Mo.  63. 

-'Chicago,  etc.  Co.  v.  Moffitt,  75  111.  524;  Coggin  v.  Central  R.  Co.,. 
62  Ga.  685;  New  Bedford  R.  Co.  v.  Old  Colony  R.  Co.,  120  Mass.  397. 

3Tomlinson  v.  Branch,  15  Wall.  (U.  S.)  460;  New  Jersey,  etc.  Ry. 
Co.  V.  Straight,  35  N.  J.  L.  323;  Fisher  v.  New  York,  etc.  Co.,  46  N.  Y. 
644;  Rome,  etc.  R.  Co.  v.  Ontario,  etc.  Co.,  16  Hun  (N.  Y.),  445;  Rail- 
road Co.  V.  Maine,  96  U.  S.  497;  Philadelphia,  etc.  R.  Co.  v.  Maryland^ 
10  How.  (U.  S.)  376. 

*  Thompson  v.  Abbott,  61  Mo.  176;  Lightner  v.  Boston,  etc.  R.  Co., 
1  Low.  (U.  S.)  338;  County  of  Scotland  v.  Thomas,  94  U.  S.  682; 
State  V.  Green  Co.,  54  Mo.  540;  Nugent  v.  Supervisors,  19  WalL 
(U.  S.)  241. 

5  Bruffett  V.  Great  Western  R.  Co.,  25  111.  353. 

^McCray  v.  Junction,  etc.  R.  Co.,  9  Ind.  358;  Campbell's  Case,  8 
Eng.  Rep.  678;  Clearwater  v.  Meredith,  1  Wall.  (U.  S.)  25;  State  v. 


§  1^7.]  EAILEOA.D    CORPORATIONS.  201 

a  stockholder  and  a  corporation  is  one  of  contract,  and 
any  legislative  enactment  authorizing  a  material  change 
in  the  powers  or  purposes  of  a  corporation  not  in  aid  of 
the  original  object,  if  acted  upon  by  the  corporation,  is 
not  binding  upon  the  stockholder  without  his  consent.^ 
Accordingly,  stockholders  of  the  old  corporations  who  do 
not  enter  into  the  new  are  entitled  to  withdraw  their 
shares  and  ma}^  enjoin  until  they  are  secured.^  The  rea- 
sons why  non-consenting  shareholders  are  not  bound  by 
such  act  of  consolidation  are  forcibly  and  clearly  stated 
by  Mr.  Justice  Lowrie  in  Lauman  v.  Lebanon  R.  Co.,  supra. 
He  there  said:  "The  dissentiate  shareholder  may  object 
that  his  co-corporators  have  no  power  to  make  a  new 
contract  for  him  and  thereby  constitute  him  a  member 
of  a  new  and  different  corporation ;  for  it  is  of  the  very 
nature  of  a  contract  relation  that  it  can  be  instituted  only 
by  real  parties  to  it,  unless  it  be  a  mere  constructive  con- 
tract, which  is  only  a  convenient  form  or  fiction  of  law, 
invented  to  enforce  a  corresponding  legal  duty.  He  may 
object  that  even  the  legislature  cannot  authorize  this,  for 
by  so  doing  they  would  authorize  the  destruction  of  one 
private  contract  and  the  compulsory  creation  of  another 
in  its  stead,  and  would  take  away  the  remedy  by  due 
course  of  law  which  the  dissenting  shareholder  is  entitled 
to  because  of  the  departure  or  the  diversion  of  the  asso- 
ciation from  its  agreed  purposes;  and  would,  besides 
this,  change  the  essential  nature  of  contracts,  which  even 
legislative  power  cannot  do,  and  much  less  legislative  au- 
thority." 

Bailey,  16  Ind.  46;  Spering's  Appeal,  71  Pa.  St.  11;  Lauman  v.  Leb- 
anon R.  Co.,  30  Pa.  St.  43. 

1  McCray  v.  Junction  Ry.,  9  Ind.  358. 

2  State  V.  Bailey,  16  Ind.  46;  Spering's  Appeal,  71  Pa.  St.  11;  Clear- 
water V.  Meredith,  1  Wall  (U.  S.)  25. 


t202  KAILKOAD    CORPORATIONS.  [§  l-i3. 

§  148.  Consolidation  as  affecting  taxation. —  AVhen  two 
corporatious  are  consolidated  into  one  b}'  act  of  the  legis- 
lature, an  exemption  from  taxation  contained  in  the 
charter  of  one  of  such  corporations  will  not,  by  such  con- 
solidation, be  extended  to  the  property  of  the  other, 
whose  charter  contained  no  such  exemption,  which  by 
the  consolidation  became  joint  property ;  and  in  the  ab- 
sence of  a  clear  expression  of  intent  to  the  contrary,  the 
property  of  each  of  the  united  corporations  will  be  held, 
after  such  consolidation,  with,  the  same  privileges  and 
burdens  as  ordinarily  attached  thereto.^  So  where  two 
or  more  corporations,  subjected  to  a  special  tax  upon  the 
net  income  of  their  roads,  with  immunity  from  other  tax- 
ation, the  amount  of  such  special  tax  being  dependent 
upon  reports  to  be  made  and  information  to  be  communi- 
cated by  their  directors  and  other  officers,  are  consolidated 
into  a  new  corporation  with  diti'erent  directors  and  other 
officers,  who  are  neither  bound  nor  able  to  make  reports 
and  give  the  information  required  of  the  original  com- 
panies, the  new  corporation  thus  created  is  not  entitled 
to  the  immunity  of  the  original  corporations  from  general 
taxation.-  But  where  two  railroad  corporations  whose 
shares  are,  by  a  state  statute,  exempt  from  taxation  in 
the  state,  consolidate  themselves  into  a  new  company 
under  a  state  law,  which  makes  no  provision  to  the  con- 
trary, and  issues  shares  in  the  new  company  in  exchange 
for  shares  in  the  old  company,  the  right  of  exemption 
from  taxation  in  the  state  passes  into  the  new  shares,  and 
into  each  of  them.^     The  same  is  true  where  three  rail- 

i  State  V.  Commissioners,  37  N.  J.  L.  208;  Pliiladelphia.  etc.  Co.  v, 
Maryland,  10  How.  (U.  S.)  376;  Tomlinson  v.  Branch,  15  Wall.  (U.  S.) 
4C0;  Delaware  Tax  Cases.  18  Wall.  (U.  S.)  206;  Central  Railroad  v. 
Georgia,  92  U.  S.  665;  Branch  v.  Charleston,  92  U.  S.  677. 

2  Railroad  Co.  v.  Maine.  96  U.  S.  499. 

3  Tennessee  v.  Whitworth,  117  U.  S.  129. 


g  149.]  KAILROAD   COKPOKATIONS.  203 

roads  consolidate,  one  of  Avbich  is  a  corporation  of  an- 
other state,  unless  the  law  of  that  state  makes  provision 
to  the  contrary.' 

§149.  ^^  Trusts''^  or  illegal  comhinations. —  A  "trust" 
may  be  defined  to  be  a  voluntary  association  by  and  be- 
tween the  stockholders  of  two  or  more  corporations, 
engaged  in  a  like  business,  to  contribute  their  stock  shares 
and  agree  to  share  the  profits  of  such  business  on  all  the 
shares  when  placed  in  a  common  fund,  agreeing  indi- 
rectly also  to  share  the  losses  naturally  falling  upon  stock- 
holders in  other  companies  in  which  no  profits  are  made.^ 
Such  a  trust  or  combination  is  usually  consummated  by  an 
agreement  where  all  or  a  majority  of  the  stockholders 
of  a  corporation  transfer  their  stock  to  certain  trustees, 
in  consideration  of  the  agreement  of  the  stockholders  of 
other  companies  and  of  the  members  of  limited  partner- 
ships engaged  in  the  same  business  to  do  likewise ;  by 
which  agreement  all  are  to  receive,  in  lieu  of  their  stocks 
and  interests  so  transferred,  trust  certificates,  to  be  is- 
sued by  the  trustees,  equal  at  par  to  the  par  value  of  their 
stock  and  interests;  and  by  which  the  trustees  are  em- 
powered, as  apparent  owners  of  the  stock,  to  elect  direct- 
ors of  the  several  companies,  and  thereby  control  their 
affairs  in  the  interests  of  the  trust  so  created;  and  are  to 
receive  all  dividends  made  by  the  several  companies  and 
limited  partnerships,  from  which,  as  a  common  fund, 
dividends  are  to  be  made  by  the  trustees  to  the  holders 
of  the  trust  certificates.  Such  a  trust  or  combination  en- 
tered into  by  corporations  has  been  held  as  tending  to 
create  a  monopoly,  to  control  production  as  well  as  prices, 
and  is  against  public  policy,  illegal  and  void.'' 

iPearce  v.  Madison,  etc.  R.  Co.,  21  How.  (U.  S.)  441;  Balfour  v. 
Ernest,  5  C.  B.  (N.  S.)  691,  28  L.  J.  (C.  P.)  170. 
-'The  Legality  of  Trusts,  p.  621,  by  Tlieodore  W.  Dwiglit. 
estate  V.  Standard  Oil  Co.,  49  Ohio  St.  137;  American  Preserves 


204  RAILROAD   CORPORATIONS.  [§  140. 

Trust  V.  Taylor  Mfg.  Co.,  46  Fed.  Rep.  152;  People  v.  Chicago  Gas 
Trust,  130  111.  268;  Emery  et  al.  v.  Ohio  Candle  Co.,  24  N.  E.  Rep. 
600;  Richardson  v.  Buhl,  77  Mich.  632;  People  v.  Nortli  River  Sugar 
Refining  Co.,  121  N.  Y.  582;  Mallory  v.  Hannauer  Oil  Works,  86 
Tenn.  598;  New  York,  etc.  Canal  Co.  v.  Fulton  Bank,  7  Wend.  (N.  Y.) 
412;  Clearwater  v.  Meredith,  1  Wall.  29;  Whittenton  Mills  v.  Upton, 
10  Gray  (Mass.),  582. 

In  People  v.  The  North  River  Sugar  Refining  Co.,  supra,  in  a  gen- 
eral discussion  of  this  subject,  the  court  say: 

"  It  remains  to  determine  whether  the  conduct  of  the  defendant 
in  participating  in  the  creation  of  the  trust,  and  becoming  an  ele- 
ment of  it,  was  illegal,  and  tended  to  the  public  injury;  and  we  may 
consider  the  two  questions  together,  and  without  formal  separation. 
It  is  quite  clear  that  the  etfect  of  the  defendant's  action  was  to  di- 
vest itself  of  the  essential  and  vital  elements  of  its  franchise  by 
placing  them  in  trust;  to  accept  from  the  state  the  gift  of  corporate 
life,  only  to  disregard  the  conditions  on  which  it  was  given ;  to  re- 
ceive its  powers  and  privileges  merely  to  put  them  in  pawn;  and  to 
give  away  to  an  irresponsible  board  its  entire  independence  and  self- 
control.  When  it  had  passed  into  the  hands  of  the  trust,  only  the 
shell  of  a  corporation  was  left  standing  as  a  seeming  obedience  to 
the  law,  but  with  its  internal  structure  destroyed  or  removed.  Its 
stockholders,  retaining  their  beneficial  interests,  have  separated 
from  it  their  voting  powers,  and  so  parted  with  the  control  which 
the  charter  gave  them  and  the  state  required  them  to  exercise.  It 
has  a  board  of  directors  nominally  and  formally  in  office,  but  quali- 
fied by  shares  which  they  do  not  own,  and  owning  their  official  life 
to  the  board  which  can  end  their  power  at  any  moment  of  disobedi- 
ence. It  can  make  no  dividends,  whatever  may  be  its  net  earnings, 
and  must  incumber  its  property  at  the  command  of  its  master,  and  for 
purposes  wholly  foreign  to  its  own  coi'porate  interests  and  duties. 
At  the  command  of  that  master  it  has  ceased  to  refine  sugar,  and, 
without  any  doubt,  for  the  purpose  of  so  far  lessening  the  market 
supply  as  to  prevent  what  is  termed  'overproduction.'  In  all  these 
respects  it  has  wasted  and  prevented  the  privileges  conferred  by  the 
charter,  abused  its  powers,  and  proved  unfaithful  to  its  duties.  But 
graver  still  is  the  illegal  action  substituted  for  the  conduct  which 
the  state  has  a  right  to  expect  and  require.  It  has  helped  to  create 
an  anomalous  trust,  which  is,  in  substance  and  effect,  a  partnership 
of  twenty  separate  corporations.  The  state  permits  in  many  ways 
an  aggregation  of  capital,  but,  mindful  of  the  possible  dangers  to  the 
people,  overbalancing  the  benefits,  keeps  upon  it  a  restraining  hand. 


■§  1-19.]  EAILKOAD   COKrOEATIOXS.  205 

and  maintains  over  it  a  prudent  supervision,  where  such  aggrega- 
tion depends  upon  the  permission  and  grows  out  of  corporate  grants. 
It  is  a  violation  of  law  for  corporations  to  enter  into  partnerships. 
.  .  .  That  the  combination  of  the  refineries  partakes  of  the  nature 
of  a  partnership  is  not  denied.  Indeed,  in  one  of  the  papers  added 
to  the  appellant's  brief,  it  is  not  only  admitted,  but  asserted  and 
defended.  This  paper  shows  quite  clearly  that  by  force  of  the  ar- 
rangement there  was  a  community  of  interest  in  the  fund  created 
by  the  corporate  earnings  before  division,  and  that  each  member 
of  the  trust  shared  in  the  profit  and  loss  of  all.  It  is  said,  however, 
that  a  consolidation  of  manufacturing  corporations  is  permitted  by 
the  law,  and  that  the  trust  or  combination  or  partnership,  however 
it  may  be  described,  amounts  only  to  a  practical  consolidation,  which 
IDublic  policy  does  not  forbid,  because  the  state  permits  it.  .  .  . 
The  refineries  did  not  avail  themselves  of  the  statute.  They  chose 
to  disregard  it,  and  to  reach  its  practical  results  without  subjecting 
them  to  the  prudential  restraints  with  which  the  state  accompanied 
its  permission.  If  there  had  been  a  consolidation  under  the  statute, 
one  single  corporation  would  have  taken  the  place  of  the  others  dis- 
solved. They  would  have  disappeared  utterly,  and  not,  as  under  the 
trust,  remained  in  apparent  existence  to  threaten  and  menace  other 
organizations,  and  occupy  the  ground  which  otherwise  would  be 
left  free.  Under  the  statute,  the  resultant  combination  would  itself 
be  a  corporation  deriving  its  existence  from  the  state,  owing  duties 
and  obligations  to  the  state,  and  subject  to  the  control  and  super- 
vision of  the  state;  and  not,  as  here,  an  unincorporated  board,  a 
colossal  and  gigantic  partnership  having  no  corporate  functions  and 
owing  no  corporate  allegiance.  Under  the  statute,  the  consolidated, 
taking  the  place  of  the  separate,  corporations,  could  have  capital 
stock  only  in  an  amount  equal  to  the  fair  aggregate  value  of  the 
rights  and  franchises  of  the  companies  absorbed;  and  not,  as  here, 
a  capital  stock  double  that  value  at  the  outset,  and  capable  of  an 
elastic  and  irresponsible  increase.  The  difference  is  very  gi-eat,  and 
serves  further  to  indicate  the  inherent  illegality  of  the  trust  com- 
bination. 

"  And  here  I  think  we  gain  a  definite  view  of  the  injurious  tend- 
encies developed  by  its  organization  and  operation,  and  of  the  public 
interests  which  are  menaced  by  its  action.  As  corporate  grants  are 
always  assumed  to  have  been  made  for  the  public  benefit,  any  con- 
duct which  destroys  their  nominal  functions,  and  maims  and  crip- 
ples their  separate  activity  and  takes  away  their  free  and  independ- 
ent action,  must  so  far  disappoint  the  purpose  of  their  creation  as 


20G  KAILEOAD  COKPOKATIONS.  [§  149. 

to  affect  unfavorably  the  public  interests;  and  that  to  a  much 
greater  extent  when,  beyond  their  own  several  aggregations  of  cap- 
ital, they  copipact  them  all  into  one  combination  which  stands  out- 
side the  ward  of  the  state,  which  dominates  the  range  of  an  entire 
industry  and  puts  upon  the  market  a  capital  stock  proudly  defiant 
of  actual  value  and  capable  of  an  unlimited  expansion.  It  is  not  a 
sufficient  answer  to  say  that  similar  results  may  be  lawfully  accom- 
plished, that  an  individual  having  the  necessary  wealth  might  have 
bought  all  their  refineries,  manned  them  with  his  own  chosen  agents 
and  managed  them  as  a  group  at  his  sovereign  will;  for  it  is  one 
thing  for  the  state  to  respect  the  rights  of  ownership  and  protect 
them  out  of  regard  to  the  business  freedom  of  the  citizen,  and  quite 
another  thing  to  add  to  that  possibility  of  further  extension  of  those 
consequences  by  creating  artificial  persons  to  aid  in  producing  such 
aggregations.  The  individuals  are  few  who  hold  in  i^ossession  such 
enormous  wealth,  and  fewer  still  who  peril  it  all  in  a  manufactur- 
ing enterprise;  but  if  corporations  can  combine  and  mass  their  fort- 
unes in  a  solid  trust  or  partnership,  with  little  added  risk  to  the 
capital  already  embarked,  without  limit  to  the  magnitude  of  the 
aggregation,  a  tempting  and  early  road  is  opened  to  enormous  com- 
binations vastly  exceeding  in  number  and  in  strength  and  in  their 
power  over  industry  any  possibilities  of  individual  ownership:  and 
the  state,  by  the  creation  of  the  artificial  persons  constituting  the 
elements  of  the  combination,  and  failing  to  limit  and  restrain  their 
power,  becomes  itself  the  responsible  creator,  the  voluntary  cause, 
of  an  aggregation  of  capital  which  it  simply  endures  in  the  individ- 
ual as  the  product  of  its  free  agency.  "What  it  may  bear  is  one 
thing;  what  it  should  cause  and  create  is  quite  another." 


CHAPTEK  X. 

THE   DOCTRINE    IN   ITS   RELATION    TO    DIRECTORS    AND 
OTHER  OFFICERS  AND  AGENTS  OF  CORPORATIONS. 

§  150.  Introductory. 

151.  Distinction  between  corporate  acts  and  unauthorized  acts  of 

directors. 

152.  Test  to  distinguisii  acts  of  directors  from  corporate  acts. 

153.  Directors  as  trustees. 

154.  General  powers  of  directors. 

155.  Instances  of  directors'  powers. 

156.  General  liability  of  directors. 

157.  Power  of  bank  directors. 

158.  Liability  of  bank  directors. 

159.  Powers  and  liabilities  of  bank  president. 

160.  Powers  and  duties  of  bank  cashier. 

161.  Instances  of  cashier's  powers. 

§  150.  Introductory. —  In  the  adjudications  by  the 
courts  of  the  various  questions  arising  out  of  the  dealings 
and  business  transactions  of  corporations  in  this  coun- 
try, the  unauthorized  acts  and  contracts  of  the  directors 
and  other  agents  of  the  corporation  have  been  so  fre- 
quently confounded  and  regarded  as  the  acts  and  con- 
tracts of  the  corporation  itself,  thereby  involving  the 
doctrine  of  ultra  mres  in  a  maze  of  uncertainty  and  con- 
fusion, that  it  is  deemed  proper  to  give  some  attention 
and  devote  some  space  to  the  examination  of  the  office 
and  powers  of  this  very  numerous  class  of  corporate  rep- 
resentatives. 

§  151.  Distinction  Ijetii'een  corporate  acts  and  nnauilior- 
ized  acts  of  directors. —  Much  of  the  unintelligible  con- 
fusion which  has  arisen  in  many  of  the  state  courts  in  the 
application  of  the  doctrine  of  ultra  vires  is  the  result  of 


208  DIKECTOES   AND   AGENTS.  [§  151. 

confounding  the  distinction  between  a  corporation  and 
its  directors  or  other  representatives.  To  properly  apply 
this  doctrine  and  arrive  at  its  legitimate  construction, 
such  distinction  should  be  carefully  observed  and  kept 
steadily  in  mind,  to  avoid  confusion.  Ordinarily,  the  man- 
aging officers  or  directors  of  a  corporation  and  the  corpo- 
ration itself  are  regarded  as  identical;  and  as  the  acts  of 
such  officers  or  directors,  when  within  the  scope  of  the 
corporate  powers,  are  held  to  be  the  acts  of  the  corpora- 
tion itself,  the  former  is  often  meant  when  the  latter  is 
mentioned,  and  the  acts  of  the  one  confounded  with  the 
acts  of  the  other.  As  was  remarked  in  one  of  the  open- 
ing paragraphs  of  this  work,  a  corporation  is  an  ideal 
person,  intangible,  invisible,  and,  to  a  certain  extent,  is 
invested  with  the  elements  of  immutability.^  The  direct- 
ors are  simply  the  agents  of  the  corporation,  and  when 
their  acts  are  confined  within  the  limits  of  the  agency 
they  are  a  perfect  representative.  Beyond  that  —  acts 
committed  ultra  vires  the  corporation  —  their  actions  may 
be  regarded  as  unlawful  usurpations.  The  charter  of  the 
corporation  may  properly  be  said  to  be  its  constitution, 
and  the  powers  therein  recited  the  limit  of  its  authority. 
Whatever  may  be  attempted,  therefore,  outside  the  scope 
of  its  prescribed  powers,  is  not  the  act  of  the  corpora- 
tion —  the  ideal  person  —  but  is  the  unauthorized  act  of 
the  agent.  As  the  corporation  can  act  only  by  law,  the 
logical  deduction  would  be  that  whatever  it  does  must  be 
lawful.  A  ])riori^  that  which  is  unlawful,  because  made 
so  by  the  law  of  its  creation,  is  not  the  act  or  deed  of  the 
corporation,  but  is  a  wrong  or  usurpation  of  those  who 
falsely  act  in  its  name.^ 

1  See  §  3,  ante. 

2  In  Bank  of  United  States  v.  Dandridge,  12  Wheat.  64,  the  court 
say:  "It  is  most  manifest  that  the  corporation  is  altogether  a  dis- 
tinct body  from  the  directors,  possessing  all  the  general  powers  and 


■§  152.]  DIRECTOES   AND   AGENTS.  209 

§  152.  Test  to  distinguisli  acts  of  directors  from  corim- 
rate  acts. —  To  distinguish  the  acts  of  a  corporation  from 
the  unauthorized  acts  of  the  directors,  a  test  has  been 
very  clearly  laid  down  by  Yice-chancellor  Wickens  in  the 
•case  of  Pickering  v.  Stephenson^  L.  R.  14  Eq.  340.  The 
learned  vice-chancellor,  in  discussing  the  powers  which 
directors  may  exercise,  said :  "  To  distinguish  unauthor- 
ized acts  of  directors  from  those  of  the  corporation,  the 
test  is  whether  the  acts  performed  or  the  contracts  en- 
tered into  are  for  purposes  which  are  reasonably  in- 
cidental to  the  carrying  on  of  the  business  of  the  com- 
pany. To  arrive  at  this  determination,  the  charter,  which 
is  the  constitution  of  the  corporation,  and  the  law  under 
which  it  is  organized,  must  be  consulted.  Bona  fides  can- 
not be  the  solo  test ;  otherwise,  it  is  truly  said,  you  might 
have  a  lunatic  conducting  the  affairs  of  the  company,  and 
paying  away  its  money  with  both  hands  in  a  manner  per- 
fectly hona  fide,  yet  perfectly  irrational.  The  test  must 
be  what  is  reasonably  incidental  and  within  the  reason- 
able scope  of  carrying  on  the  business  of  the  company." 

attributes  of  an  aggregate  corporation,  and  entitled  to  direct  and 
superintend  the  management  of  its  own  property  and  the  govern- 
ment of  the  institution,  and  to  enact  by-laws  for  this  purpose.  So 
far  as  the  act  delegates  authority  to  the  directors,  the  latter  possess 
it,  and  may  exercise  it,  not  as  constituting  the  corporation  itself, 
but  as  its  express  statutory  agents  to  act  in  the  ordinary  business 
of  the  institution.  The  directors  are  created  a  board,  and  not  a  cor- 
porate body.  If  the  authority  delegated  to  them  can  only  be  ex- 
pressed by  them  when  assembled  as  a  board,  with  a  proper  quorum, 
and  not  by  the  separate  assent  of  a  majority  of  the  whole  body, 
still  it  is  clear  that  their  meeting  and  acts  are  but  the  meetings  and 
acts  of  a  board  of  agents  acting  ex  officio,  and  not  the  meetings  and 
acts  of  the  corporation  itself.  The  whole  structure  of  the  charter, 
and  the  whole  proceedings  under  it,  as  well  as  the  by-laws  and  reg- 
ulatipns  which  have  come  under  our  review,  demonstrate  that  this 
has  been  the  uniform  construction  of  the  corporation  itself  and  of 
the  directors." 
14 


210  DIREOTORR    AND    AGENTS.  [§  153. 

§  ir>3.  Directorft  as  trustees. —  Tho  rolaiion  of  a  di- 
rector to  tlio  sto(;lvliol(lor.s  of  tlio  cor[)or'.'itiou  is  ^onorally 
roganlod  as  ariiilo^^oiis  to  tlio  position  of  a  trustee  towards 
his  cestui  que  irunt}  This  statem(5nt  of  iiis  relation,  liow- 
ovor,  must  i)o  tak(!n  with  soiim  ino(li(i(;;i,tion,  as,  technic- 
ally, there  is  an  esscntiiil  distinction  between  a  director 
and  a  trustoo,  which  lias  been  stated  as  follows:  "A 
trustee  is  a  man  who  is  tho  owner  of  property  and  deals 
with  it  as  a  princii)al,  as  owner,  and  as  master,  su})ject 
only  to  an  ecpiitabU!  obli/^^ation  to  account  to  some  per- 
sons to  whom  he  stands  in  tho  relation  of  trustee,  and  who 
are  his  cckUu  que  truHt.  Tho  samo  individual  may  fill  tho 
ollice  of  dii'(!(;tor  and  also  bo  a  trustcici  haviu;^  pr-operty, 
but  that  is  rai'(5,  (exceptional,  and  a  casual  circumstance. 
The  ollic(;  of  (linector  is  tliatof  a  |);ud  s(!rv;uit  of  the  com- 
pany. A  director  never  enters  into  a  contniet  himself,  but 
ho  enters  into  contracts  for  his  principal,  that  is,  for  the 
company  of  whom  he  is  a  director,  and  for  whom  ho  is 
actinf^.  He  cannot  sue  on  such  contracts,  nor  be  sued  on. 
them  unless  ho  exceeds  his  authority.  That  seems  to  be 
tJHi  broMd  distinction  between  trustees  and  dii-ectors.''^ 

'  CiiinborlHnd,  otn.  Co.  v.  Parish,  43  Md.  598;  Aberdeen  R.  Co.  v. 
l{|;ukie,  1  IVlucq.  (II.  L.)  401 ;  Croat  TiUxcinbourf;  R.  Co.  v.  Mafifiay,  25 
Beav.  rm\  ]l()(rinan,  etc.  Co.  v,  Cumb(>rland,  etc.  Co.,  10  Md.  450; 
S,  O.,  L'O  T\Td.  117;  Aitoriicy-Ccneral  v.  Wilson,  1  Craig  &  P.  1;  Ben- 
son V.  Jlcatliorii,  1  Y()iiri};(>  &  C.  '520:  York,  etc.  R.  Co.  v.  Hudson, 
10  H<>av.  41)5;  lloylov.  PlattsburK,  eto.  R.  Co..  54  N.  Y.  JJH;  Kuropean. 
etc.  R.  (>o.  V.  Poor,  50  Me.  277;  lOnoy.  Law,  vol.  17,  p.  Ul,  and  cases 
cited;  Sporing's  Appeal,  71  Pa.  St.  11. 

-'Smith  V.  Anderson,  15  Ch.  Div.  275, 

In  Spering's  Appeal,  niipra,  Siiarswood,  J.,  spc-ikiiif^  for  llu>  court, 
Hjiys:  "It  is  by  no  means  a  well-settled  point  wiiat  is  tiie  precise  rc- 
liition  which  directors  sustain  to  stoi-kliolders.  Tiiey  are  uii(ioul)t- 
edly  snid  in  many  authorities  to  be  trustees,  but  that,  as  I  appre- 
lieiid,  is  oidy  in  a  fijeneral  s(>nse,  ;is  wo  term  an  aj^ent  or  a!iy  bailee 
intrusted  with  tho  care  and  management  of  the  property  of  an- 
otlier.     It  is  certain  that  they  are  not  technical  trustees.     Thej'  can 


§§  154,  155.]  DIRECTORS    AND   AGENTS.  211 

§  154.  General  powers  of  directors. —  It  isa^vell  estab- 
lished rule  that  the  directors  of  a  corporation  are  merely 
its  agents  for  limited  purposes,  and  they  have  no  power 
to  bind  it  by  any  acts  or  contracts  outside  the  general 
scope  of  the  powers  conferred  by  the  charter  and  by-laws 
of  the  corporation.^  Being  but  agents,  it  can  never  be 
presumed  that  they  have  authority  to  transact  business 
which  the  corporation  itself  is  not  authorized  to  engage 
in.2  The  power  of  directors  of  private  corporations  to 
bind  them  by  contracts  depends  exclusively  upon  the 
charters  and  by-laws  of  such  corporations.  So  the  dec- 
larations and  acts  of  directors  will  not  bind  or  affect  in 
any  manner  the  corporation,  unless  they  are  within  the 
scope  of  their  ordinary  powers.' 

§  155.  Instances  of  directors'  potvers. —  Directors  of  an 
insolvent  corporation  cannot,  as  creditors  of  such  corpo- 

only  be  regarded  as  mandataries  —  persons  who  have  gratuitously 
undertaken  to  perform  certain  duties,  and  they  are  therefore  bound 
to  apply  ordinary  skill  and  diligence,  but  no  more.  Indeed,  as  the 
directors  are  themselves  stockholders,  interested  as  well  as  all  others 
that  the  affairs  and  business  of  the  corporation  should  be  success- 
ful, when  we  ascertain  and  determine  that  they  have  not  sought  to 
make  any  profit  not  common  to  all  the  stockholders,  we  raise  a 
strong  presumption  that  they  have  brought  to  the  administration 
their  best  judgment  and  skill.  Ought  they  to  be  held  responsible 
for  mistakes  of  judgment  or  want  of  skill  and  knowledge?  .  .  . 
I  do  not  mean  to  say,  by  any  means,  that  their  responsibility  is  lim- 
ited to  these  cases,  and  that  there  might  not  exist  such  a  case  of 
negligence,  or  of  acts  clearly  ultra  vires,  as  would  make  perfectly 
honest  directors  personally  liable." 

IBank  of  U.  S.  v.  Dandridge,  12  Wheat.  64;  Pickering  v.  Stephen- 
son, L.  E.  14  Eq.  340:  In  re  Faure  Electric  Co.,  40  Ch.  Div.  141: 
Spering's  Appeal,  71  Pa.  St.  Ill;  Overend  &  Gurney  Co.  v.  Gibbs,  5 
H.  L.  480;  Hodges  v.  Screw  Co.,  IR  I.  322;  Briggs  v.  Spaulding,  141 
U.  S.  132. 

2  Alexander  v.  Cauldwell,  83  X.  Y.  480. 

3  Soper  V.  Buffalo  R  R  Co.,  19  Barb.  (X.  Y.)  310;  East  River  Bank 
v.  Hoyt,  41  id.  441. 


212  DIKECTOKS   AND    AGENTS.  [§  156. 

ration,  secure  to  themselves  a  preference.^  They  may 
make  a  valid  assignment  of  the  property  of  the  corpora- 
tion for  the  benefit  of  its  creditors,  even  against  the  will 
of  the  stockholders.^  Where  directors  declare  a  dividend 
with  knowledge  that  there  are  no  profits,  such  action  is 
illegal.''  Where  an  agreement  has  been  made  by  the 
president  of  a  railroad  company,  subject  to  the  approval 
of  the  directors  and  stockholders,  to  do  something  which 
is  ultra  vires,  and  the  directors  have  approved  it,  the 
court  will  interfere  by  injunction  upon  application  of  a 
single  stockholder.*  A  director  of  a  corporation  cannot 
enforce  a  contract  made  with  his  co-director  under  which 
he  is  to  have  one-third  of  the  profit  for  selling  a  railroad 
property,  such  contract  being  beyond  the  powers  of  the 
director  to  make.^  So,  also,  resolutions  passed  by  di- 
rectors, without  any  authority  either  by  statute  or  charter, 
to  assume  the  debts  and  to  buy  a  majority  of  the  stock 
and  bonds  and  the  equipments  of  a  rival  company,  are 
ultra  vires,  and  the  proposed  purchase  could  not  be  exe- 
cuted even  if  ratified  by  the  stockholders.® 

§  156.  General  lidbility  of  directors. —  As  a  general 
rule  the  directors  of  a  corporation  are  only  required  in 
the  management  of  its  affairs  to  keep  within  the  limits 
of  its  powers  and  to  exercise  good  faith  and  honesty.^ 
They  only  undertake  by  virtue  of  the  assumption  of  the 

1  Smith  V.  Putnam,  61  N.  H.  633. 

2  Hutchinson  v.  Green,  91  Mo.  367. 

3  Slayden  v.  Seip,  25  Mo.  App.  439. 

*Elkins  V.  Camden,  etc.  R.  Co.,  36  N.  J.  Eq.  5;  Hubbard  v.  Invest- 
ment Co.,  14  Fed.  Rep.  675. 
*  Hubbard  v.  Investment  Co.,  14  Fed.  Rep,  675. 

6  Elkins  V.  Camden,  etc.  R.  Co.,  36  N.  J.  Eq.  5. 

7  Bank  V.  St.  John,  25  Ala.  611;  Smith  v.  Manufacturing  Co.,  39 
Ala.  503;  Ryan  v.  Railroad  Co.,  21  Kan.  365;  Shea  v.  Mabry,  1  Lea 
(Tenn.),  319;  Vance  v.  Insurance  Co.,  4  Lea  (Tenn.),  385 


§  157.]  DIKECTOKS   AND   AGENTS.  213 

duties  incumbent  on  them  to  perform  those  duties  accord- 
ing to  their  best  judgment  and  with  reasonable  diligence, 
and  a  mere  error  of  judgment  will  not  subject  them  to 
personal  liability  for  its  consequences.^  And  unless  there 
has  been  some  violation  of  the  charter  of  the  company, 
or  unless  there  is  shown  to  be  a  want  of  good  faith,  or  a 
wilful  abuse  of  discretion,  or  negligence,  there  will  be  no 
personal  liability.^  The  degree  of  care  and  prudence 
which  directors  must  exercise  depends  upon  the  subject 
to  which  it  is  applied,  and  each  case  must  be  determined 
in  view  of  all  the  circumstances.^  Directors  are  person- 
ally liable  if  they  suffer  the  corporate  funds  or  property 
to  be  wasted  by  gross  negligence  and  inattention  to  the 
duties  of  their  trust.*  But  a  director  will  not  incur  per- 
sonal liability  if  the  other  party  knew,  or  had  equal 
means  with  the  officer  of  knowing,  that  the  act  was  be- 
yond his  powers.^ 

§  l^T.  Potvers  ofhanlc  directors. —  However  broad  and 
general  the  powers  of  the  directors  may  be  for  the  gov- 
ernment of  a  bank  by  the  general  language  of  the  charter 
and  by-laws,  those  powers  are  not  unlimited.  The  bank, 
being  a  body  corporate  under  the  law,  is  a  person,  although 

1  Godbold  V.  Bank,  11  Ala.  191 ;  Van  Dyke  v.  McQuade,  86  N.  Y.  38; 
Spering's  Appeal,  71  Pa.  St.  11;  Hodges  v.  Screw  Co.,  1  R.  I.  322;  Cit- 
izens' Bldg.  Ass'n  V.  Coriell,  34  N.  J.  Eq.  383;  Briggs  v,  Spaulding, 
141  tJ.  S.  132. 

2  0verend  v.  Gibb,  5  H.  L.  480;  Hedges  v.  Pacquett,  3  Oreg.  77; 
Excelsior  Co.  v.  Lacey,  63  N.  Y.  422;  Vance  v.  Insurance  Co.,  4  Lea 
(Tenn.),  385;  Godbold  v.  Bank,  11  Ala.  191. 

3  Briggs  V.  Spaulding,  141  U.  S.  132;  Mor.  Priv.  Corp.,  §§  551  et  seq.; 
Citizens'  Ass'n  v.  Coriell,  34  N.  J.  Eq.  383;  Hodges  v.  Screw  Co.,  1 
R.  I.  322. 

^Robinson  v.  Smith,  3  Paige  (N.  Y.),222;  Citizens'  Ass'n  v.  Coriell, 
36  N.  J.  Eq.  383;  Brinckerhoff  v.  Bostwick,  88  N.  Y.  52. 
5  Bank  of  Augusta  v.  Earle,  13  Pet.  (U.  S.)  519. 


214  DIREOTOES    AND   AGENTS.  [§  158. 

artificial,  with  legal  identity,  and  capable  of  owning  and 
holding  its  own  property.^  They  must  exercise  ordinary 
care  and  prudence  in  the  administration  of  the  affairs  of 
a  bank,  and  this  includes  something  more  than  officiating 
as  mere  figure-heads;  they  are  entitled  under  the  law  to 
commit  the  banking  business,  as  defined,  to  their  duly 
authorized  officers,  but  this  does  not  shield  them  from 
liability  because  of  want  of  knowledge  of  wrongdoing,  if 
that  ignorance  is  the  result  of  gross  inattention.^  Directors 
of  a  bank  have  no  ownership  in  or  title  to  the  assets,  and 
cannot  act  otherwise  than  as  officers  and  agents  of  the 
bank.^ 

§  158.  LiaMUty  ofhanh  directors. —  If  the  directors  of 
a  bank  knowingly  issue  spurious  stock  and  obtain  a  loan 
on  it,  they  are  personally  liable.*  Bank  directors  are  not 
chargeable  with  the  assets  of  the  bank  as  for  property  to 
which  they  have  taken  title  or  possession  for  some  use  or 
purpose,  and  unless  they  actually  misappropriate  them 
they  cannot  be  held  to  account.*  So  a  director  of  a  bank 
is  not  liable  to  make  good  a  loss  occasioned  by  the  fraud 
or  misconduct  of  a  co-director  in  which  he  had  no  part 
and  which  was  perpetrated  without  his  connivance  or 
knowledge.^  As  a  general  proposition  the  liability  of 
bank  directors  is  subject  to  the  same  rules  as  apply  to  di- 
rectors of  any  other  corporation,  and  the  subject  needs 
no  separate  consideration. 

1  Morris  v.  Lee,  30  Fed.  Rep.  298;  Briggs  v.  Spaulding,  141  U.  S.  132. 

2  Briggs  V.  Spaulding,  141  U.  S.  132;  Morris  v.  Lee,  80  Fed.  Rep.  298. 

3  Morris  v.  Lee,  supra;  Exchange  Bank  v.  Sibley,  71  Ga.  726;  Bank 
of  Augusta  V.  Earle,  13  Pet.  519;  Bank  of  U.  S.  v.  Dandridge,  13 
Wheat.  (U.  S.)  64 

4  Exchange  Bank  v.  Sibley,  71  Ga.  726. 

5  Morris  v.  Lee,  supra. 

6  Morris  v.  Lee,  supra;  Corgill  v.  Bower,  10  Ch.  Div.  502;  Perry's 
Case,  34  L.  T.  716;  Joint-stock  Co.  v.  Brown,  L.  R.  8  Eq.  381;  Weir  v. 


§  159.]  DIRECTORS   AND   AGENTS.  215 

§159,  Poivers  and  Uahilities  of  lanh  president. —  lu 
the  absence  of  anything  in  the  act  of  incorporation  be- 
stowing special  power  upon  the  president  of  a  bank,  he 
has,  from  his  mere  official  station,  no  more  control  over 
the  corporate  property  and  funds  than  any  other  director ; 
and,  unless  his  acts  are  shown  to  pertain  to  his  official 
duties,  or  to  be  within  the  scope  of  his  legitimate  employ- 
ment, they  cannot  be  regarded  as  the  acts  of  the  corpora- 
tion, and  are  not  binding  upon  it.^  So,  in  the  absence  of 
authority,  the  president  cannot  dispose  of  the  cash  and 
credits  of  the  bank  for  the  purpose  of  settling  the  demands 
of  its  creditors.^  'Nor  by  virtue  of  his  office  can  he  sur- 
render or  release  any  claims  of  the  bank  against  any 
one.^  It  has  been  held,  however,  that  when  the  president 
has  been  permitted  by  the  directors  to  do  acts  not  within, 
the  sphere  of  his  official  duties,  and  is  thus  held  out  to 
the  public  as  having  authority  to  do  such  acts,  the  bank 
will  be  bound  on  the  ground  of  implied  authority.^    But 

Bell,  3  Exch.  Div.  238;  Turquand  v.  Marshall,  L.  R,  4  Ch.  376;  Land 
Credit  Co.  v.  Lord  Fermoy,  8  Eq.  7;  Wakeman  v.  Dalley,  51  N.  Y.  27; 
Arthur  v.  Griswold,  55  N.  Y.  400;  Robinson  v.  Smith,  3  Paige  (N.  Y.), 
222.  And  see,  as  to  general  liability,  Briggs  v.  Spaulding,  141  U.  S. 
132;  Speriug's  Appeal,  71  Pa.  St.  11,  20;  Citizens'  Bldg.  Ass'n  v.  Cor- 
iell,  34  N.  J.  Eq.  383;  Wakeman  v.  Dalley,  supra;  Brinkerhoif  v.  Bost- 
wick,  88  N.  Y.  52;  Ackerman  v.  Halsey,  37  N.  J.  Eq.  356,  38  id.  501; 
White  V.  Skinner,  13  Johns.  (N.  Y.)  307;  Randall  v.  Van  Vechten,  19 
Johns.  (N.  Y.)  60;  Tippets  v.  Walker,  4  Mass.  595;  Clark  v.  Edgar,  84 
Mo.  106;  Widrig  v.  Newport  Co.,  82  Ky.  512;  Ward  v.  Davidson,  89 
Mo.  445. 

1  Titus  V.  Railroad  Co.,  37  N.  J.  L.  98;  Gibson  v.  Goldthwaite,  7 
Ala.  282;  Hoyt  v.  Thompson,  5  N.  Y.  320;  s.  C,  19  N.  Y.  207;  Olney 
V.  Chadsey,  7  R.  L  224;  Parker  v.  Donnally,  4  W.  Va.  648;  Dougherty 
V.  Hunter,  54  Pa.  St.  380;  Hallo  well  Bank  v.  Hamlin,  14  Mass.  178; 
Holt  V.  Winfield  Bank,  25  Fed.  Rep.  812. 

2  Gibson  v.  Goldthwaite,  7  Ala.  282;  Hoyt  v.  Thompson,  supra, 

3  Olney  v.  Chadsey,  supra. 

^Hoyt  V.  Thompson,  supra;  Parker  v.  Donnally,  4  W.  Va.  648j 
Dougherty  v.  Hunter,  54  Pa.  St.  380. 


216  DIEECTOES   AND    AGENTS.  [§  160. 

a  president  may,  by  the  acts  of  the  directors  or  man- 
agers, be  invested  with  capacity  to  bind  the  company  by 
his  acts  beyond  those  powers  Avhich  are  inherent  in  his 
office;  as  where,  in  the  general  course  of  the  company's 
business,  the  directors  or  managers  have  permitted  such 
officer  to  assume  the  control  and  direction  of  its  affairs, 
and  have  held  him  out  to  the  public  as  its  general  agent, 
his  authority  to  act  for  the  company  in  a  particular  trans- 
action may  be  implied  from  the  manner  in  w^hich  he  has 
been  permitted  by  the  directors  or  managers  to  transact 
its  business.^  If  the  president  of  a  corporation  has,  how- 
ever, the  power  to  contract  on  its  behalf,  he  has  power  to 
release  a  contract.-  But  where  the  charter  provides  that 
the  bank  shall  not  at  any  time  be  indebted  in  excess  of 
its  paid-up  capital,  the  president  is  personally  liable  for 
the  amount  of  a  bill  which  he  indorses  when  the  bank  is 
indebted  in  excess  of  that  amount.'  So  the  president  of 
a  bank  has  been  held  personally  liable  for  overdrafts 
w^hich  he  has  directed  Or  allowed,^  and  for  loss  caused 
by  his  permitting  a  customer  to  take  away  for  inspection 
securities  of  the  bank  deposited  as  collateral.* 

§  160.  General  poivers  and  duties  ofbanTi  cashier. — 
Ordinarily,  the  cashier  of  a  bank,  being  the  ostensible 
executive  officer,  is  presumed  to  have  all  the  power  nec- 
essary for  such  an  officer  in  the  transaction  of  the  legiti- 
mate business  of  banking.^  Evidence  of  powers  habitually 
exercised  by  a  cashier  of  a  bank  with  its  knowledge  and 

1  Fifth  Ward  Sav.  Bank  v.  First  Nat.  Bank,  48  N.  J.  Eq.  513. 
2Ind.  Roll.  Mill  v.  Railway  Co.,  120  IT.  S.  256. 
3Brannen  v.  Loving,  6  Ky.  328. 

4  Oakland  Bank  v.  Wilcox,  60  Cal.  126. 

5  Citizens'  Bank  v.  Wiegand,  12  Phila.  (Pa.)  496. 

6  West  St.  Louis  Bank  v.  Shawnee  Bank,  95  U.  S.  557:  Martin  v. 
Webb,  110  U.  S.  7;  Merchants'  Bank  v.  State  Bank,  10  Wall.  (U.  S.) 
604;  Bank  of  United  States  v.  Dandridge,  12  Wheat.  64;  Minor  v. 


§  161.]  DIRECTOKS   AND    AGENTS.  217 

acquiescence  defines  and  establishes,  as  to  the  public, 
those  powers,  provided  that  they  be  such  as  the  directors 
of  the  bank  may,  without  violation  of  its  charter,  confer 
on  such  cashier.  So  where,  during  a  series  of  years,  or 
in  numerous  business  transactions,  the  cashier  of  a  bank 
has  been  permitted,  in  his  official  capacity  and  without 
objection,  to  pursue  a  particular  course  of  conduct,  it  may 
be  presumed,  as  between  the  bank  and  those  who  in  good 
faith  deal  with  it,  that  he  has  acted  in  conformity  with 
instructions  received  from  those  who  have  the  right  to 
control  its  operations.^  So  far  as  the  public  are  concerned, 
it  is  immaterial  whether  the  powers  thus  exercised  are  in 
disregard  of  the  by-laws  or  not,  provided  they  are  within 
the  corporate  powers  conferred  by  the  charter.^  So  a 
bank  cashier  is  generally  understood  to  have  authority  to 
indorse  the  commercial  paper  of  his  bank,^  receive  all  the 
funds  which  come  to  the  bank  and  give  certificates  of  de- 
posit for  the  same,  and  do  all  those  things  usually  exer- 
cised by  a  cashier  in  the  performance  of  his  daily  duties.* 

§  161.  Instances  of  casMer's  poivers. —  The  cashier  of 
a  bank  has  been  held  to  have  the  following  powers :  To 

Bank,  1  Pet.  (U.  S.)  46;  Wild  v.  Bank,  3  Mason  (U.  S.),  505;  Nicliol 
V.  Insurance  Co.,3  W.  &  M.  530;  Smith  v.  Van  Co.,  8  C.  B.  668;  Agar 
V.  Insurance  Co.,  3  C.  B.  (N,  S.)  725;  Royal  Bank  v.  Turquand,  6  E.  & 
B.  337. 

1  Martin  v.  Webb,  110  U.  S.  7. 

2  Merchants'  Bank  v.  State  Bank,  10  Wall.  (U.  S.)  604,  and  cases 
supra. 

3  St.  Louis  Sav.  Bank  v.  Shawnee  Bank,  95  U.  S.  557. 
4Burnham  v.  Webster,  19  Me.  234;  Elliott  v.  Abbott,  13  N.  H.  549; 

Bank  of  Virgennes  v.  Warren,  7  Hill  (N.  Y.),  91;  Lloyd  v.  Bank,  15 
Pa.  St.  178;  Badger  v.  Bank,  26  Me.  428;  Bank  of  Kentucky  v.  Schuyl- 
kill Bank,  1  Park.  S.  Cas.  (N.  Y.)  182;  Fleckner  v.  Bank  of  United 
States,  8  Wheat.  (U.  S.)  338;  Commercial  Bank  v.  Norton,  1  Hill 
(N.  Y.),  501;  Beers  v.  Glass  Co.,  14  Barb.  (N.  Y.)  358;  Farmers',  etc. 
Bank  v.  Bank,  14  N.  Y.  624;  Barnes  v.  Ontario  Bank,  19  N.  Y.  152. 


218  DIRECTOKS   AKD   AGENTS.  [§  161. 

take  such  measures  for  the  security  and  eventual  collec- 
tion of  debts  owing  to  the  bank  as  he  may  deem  proper.^ 
He  may  release  a  debt  secured  by  a  mortgage.^  He  may 
borrow  money  in  the  ordinary  course  of  the  daily  busi- 
ness of  the  bank,  and  may  bind  the  bank  by  a  promissory 
note  executed  therefor.'  He  may  draw  checks  or  drafts 
upon  the  funds  of  the  bank  deposited  elsewhere.*  He  has 
authority  to  indorse  its  negotiable  paper  and  securities^ 
and  transfer  its  shares  of  stock.^  He  may  deliver  notes 
to  an  attorney  for  collection  and  bind  the  bank  for  costs 
of  suit.^  But  he  has  no  general  power  to  compromise 
claims  due  the  bank,^  nor  transfer  non-negotiable  paper,** 
nor  bind  the  bank  to  indemnify  an  officer  for  levying  upon 
j)roperty  on  execution  in  favor  of  the  bank,^"  nor  power 
to  discharge  the  surety  on  a  note.^^ 

1  Bridenbecker  V.  Lowell,  32  Barb.  (N.  Y.)  9;  Badger  v.  Bank,  26 
Me.  428;  Corser  v.  Paul,  41  N.  H.  24;  Bank  of  Pennsylvania  v.  Reed, 
1  W.  &  S.  (Pa.)  101. 

2  Ryan  v.  Dunlap,  17  111.  40. 

3Ballston  Bank  v.  Marine  Bank,  16  Wis.  120;  Sturges  v.  Bank,  11 
■Ohio  St.  153;  Barnes  v.  Ontario  Bank,  19  N.  Y.  152. 

4  Mechanics'  Bank  v.  Bank  of  Colorado,  5  Wheat.  (U.  S.)  326;  Chem- 
ical Bank  v.  Kohner,  8  Daly  (N.  Y.),  530;  Northern  Bank  v.  Johnson. 
5  Coldw.  (Tenn.)  88;  State  Bank  v.  Wheeler,  21  Ind.  90;  City  Bank 
V.  Perkins,  29  N.  Y.  554;  Elliott  v.  Abbott,  12  N.  H.  549;  Cooper  v. 
Curtis,  30  Me.  488;  Pratt  v.  Topeka  Bank,  12  Kan.  570. 

5  State  Bank  v.  Wheeler,  21  Ind.  90;  City  Bank  v.  Perkins,  29  N.  Y. 
554;  Elliott  v.  Abbott,  12  N.  H.  549;  Cooper  v.  Curtis,  30  Me.  488; 
Pratt  V.  Topeka  Bank,  12  Kan.  570. 

6  Smith  V.  Bank,  4  Cush.  (Mass.)  1 ;  Commercial  Bank  v.  Kortright, 
22  Wend.  (N.  Y.)  348. 

^  Eastman  v.  Coos  Bank,  1  N.  H.  23. 
8  Chemical  Nat.  Bank  v.  Kohner,  8  Daly  (N.  Y),  530. 
9 Holt  V.  Bacon,  25  Miss.  567;  Berrick  v.  Austin,  21  Barb.  196. 
10  Watson  v.  Bennett,  12  Barb.  (N.  Y.)  196. 

n  Savings  Ass'n  v.  Sailor,  63  Mo.  24;  Merchants'  Bank  v.  Rudolf,  5 
Neb.  527;  Bank  v.  Haskell,  51  N.  H.  116. 


CHAPTER  XL 

THE  DEFENSE   OF  ULTRA  VIRES  AS   TO  TORTIOUS  ACTS 
OF  OFFICERS  AND  AGENTS. 

§  163.  General  rule  as  to  corporation's  liability  for  torts. 

163.  Liability  for  tortious  acts  of  agent. 

164.  Authority  of  agent  in  fixing  liability. 

§  162.  General  rule  as  to  Uahility  for  torts. —  As  a  gen- 
eral proposition,  corporations  are  liable  for  every  wrong 
of  which  they  are  guilty,  and  in  such  a  case  the  doctrine 
•of  ultra  vires  has  no  application.^  The  rule  is  stated  by 
an  eminent  author  in  the  following  language:  "The 
rule  is  now  well  settled  that,  while  keeping  within  the 
apparent  scope  of  corporate  powers,  corporations  have  a 
general  capacity  to  render  themselves  liable  for  torts,  ex- 
cept for  those  where  the  tort  consists  in  the  breach  of 
some  duty  which,  from  its  nature,  could  not  be  imposed 
upon  or  discharged  by  a  corporation.  The  rule  of  liabil- 
ity embraces  not  only  the  negligence  and  omission  of  its 
officers  and  agents  who  are  put  in  charge  of  or  employed 
in  the  corporate  business,  but  also  all  tortious  acts  which 
have  been  authorized  by  the  corporation,  or  which  are 

iNims  V.  Mount  Hermon  School,  160  Mass.  177;  Moore  v.  Fitchburg 
R.  Co.,  4  Gray  (Mass.),  465;  Reed  v.  Savings  Bank,  130  Mass.  443; 
Fogg  V.  Railroad  Co.,  148  Mass.  513;  Philadelphia,  etc.  R.  Co.  v.  Quig- 
ley,  21  How.  (U.  S.)  203;  Merchants'  Bank  v.  State  Bank,  10  Wall. 
(U.  S.)  209;  National  Bank  v.  Graham,  100  U.  S.  699;  Gruber  v. 
Washington,  etc.  R.  Co.,  93  N.  C.  1;  Hussey  v.  Norfolk  R.  Co.,  98  N.  C. 
34;  Green  v.  London  Omnibus  Co.,  7  C.  B.  (N.  S.)  290;  Life  &  Fire 
Ins.  Co.  V.  Insurance  Co.,  7  Wend.  (N.  Y.)  31;  Green's  Brice's  Ultra 
Vires,  364. 


220  TORTS.  [§  162. 

done  in  pursuance  of  any  general  or  special  authority  to 
act  in  its  behalf  on  the  subject  to  which  they  relate,  or 
whicli  the  corporation  has  subsequently  ratified."  ^  It 
was  formerly  argued  that  such  torts  as  implied  malice,  as 
batteries,  libels,  and  the  like,  could  not  be  committed  by 
corporations,  because  the  state,  in  granting  rights  and 
privileges,  had  conferred  no  power  to  commit  unlawful 
acts,  and  such  torts,  if  committed  by  corporate  agents, 
must  consequently  be  xlUixl  vires  and  the  individual 
wrongs  of  the  agents  themselves.^  This  idea,  however, 
has  long  since  been  exploded,  and  the  great  weight  of 
modern  authority  holds  a  corporation  liable  for  such  tor- 
tious acts  of  officers  and  agents.  Accordingly,  corpora- 
tions are  now  held  liable  for  malicious  prosecution,'  or  a 
libel,^  or  false  imprisonment,^  or  the  false  representation 
of  its  agent.^     So  a  corporation  may  be  liable  even  where 

1  Cooley  on  Torts,  120,  citing  Mayor  v.  Herley,  1  Bing.  N.  C.  222, 
240;  Smith  v.  Birmingham  Gas  Co.,  1  Ad.  &  El.  526;  Maund  v.  Mon- 
mouthshire Co.,  4  M.  &  G.  453;  Eastern  R.  R.  Co.  v.  Brown,  6  Exch. 
814;  Goff  V.  Great  Nor.  R.  Co.,  3  EI.  &  El.  672;  Phila.  &  Bait.  R.  Co. 
V.  Quigley,  21  How.  202;  Thayer  v.  Boston,  19  Pick.  511;  Monument 
Nat.  Bank  v.  Globe  Works,  101  Mass.  57;  Shelden  v.  Kalamazoo,  24 
Mich.  883;  Brokaw  v.  New  Jersey  R.  Co.,  33  N.  J.  L.  328. 

^  Cooley  on  Torts,  119. 

3  Vance  v.  Erie  Ry.,  33  N.  J.  L.  334;  Copley  v.  Grover  &  Baker  Co., 
2  Woods  (U.  S.),  494;  Goodspeed  v.  East  Haddam  Bank,  32  Conn.  530; 
Carter  v.  Howe  Mach.  Co.,  51  Md.  390;  Wheless  v.  Bank,  1  Baxter 
(Tenn.),  469;  Williams  v.  Insui-ance  Co.,  57  Miss.  759;  Iowa  Mountain 
Bank  v.  Mercantile  Bank,  4  Mo.  App.  505;  Walker  v.  Railway  Co., 
L.  R.  5  C.  P.  640;  Edwards  v.  Midland  Ry.,  6  Q.  B.  Dlv.  287;  Boogher 
V.  Life  Ass'n,  75  Mo.  319. 

■» Phila.  etc.  R.  Co.  v.  Quigley,  21  How.  (U.  S.)  202;  Whitfield  v. 
Railway  Co.,  1  E.  B.  &  E.  115;  Maynard  v.  Insurance  Co.,  34  Cal.  48; 
s.  C,  47  Cal.  207;  Johnson  v.  Dispatch  Co.,  2  Mo.  App.  565;  Evening 
Journal  Ass'n  v.  McDermott,  44  N.  J.  L.  430;  Tench  v.  Railway  Co., 
32  Up.  Can.  (Q.  B.)  453. 

s Denver,  etc.  R.  Co.  v.  Harris,  122  U.  S.  597. 

^Barwick  v.  English,  etc.  Bank,  L.  R.  2  Exch.  259;  Mackay  v. 


§  163.]  TOKTS.  221 

a  fraudulent  or  malicious  intent  is  necessary  to  be  proved, 
the  fraud  or  malice  of  its  authorized  agents  being  imput- 
able to  the  corporation.^  There  is  some  doubt,  however, 
as  to  whether  a  corporation  can  be  held  liable  for  slander 
uttered  by  its  oificer  or  agent.  Mr.  Odgers  is  of  the  opinion 
that  they  cannot  be  so  held,  "  unless  it  can  be  proved  that 
the  corporation  expressly  ordered  and  directed  that  offi- 
cer to  say  those  very  words,  for  a  slander  is  the  voluntary 
and  tortious  act  of  the  speaker."  ^  So  an  action  may  be 
maintained  against  a  corporation  to  recover  damages 
caused  by  conspiracy.* 

§163.  Lidbility  for  tortious  acts  of  agent — It  is  also 
generally  admitted  that  corporations  are  liable  for  the 
acts  of  their  agents  and  servants,  while  engaged  in  the 
business  of  their  employment,  in  the  same  manner  and 
to  the  same  extent  that  individuals  are  liable.*  Corpora- 
tions are  likewise  responsible  for  acts  not  strictly  within 
the  corporate  powers,  but  done  in  their  corporate  name 
and  by  corporate  officers,  who  were  competent  to  exer- 
cise all  the  corporate  powers.^  Accordingly,  a  corpora- 
tion when  sued  for  tort  cannot  defend  on  the  ground 

Bank,  L.  R.  Priv.  Coun.  App.  394;  Ranger  v.  Railway  Co.,  5  H.  L.  73; 
Erie  City  Iron  Works  v.  Barber,  102  Pa.  St.  156;  Peebles  v.  Patapsco 
Guano  Co.,  77  N.  C.  233;  Cragie  v.  Hadley,  99  N.  Y.  131;  Caudy  v. 
Knitting  Co.,  37  N.  J.  Eq.  175. 

1  National  Exch.  Co.  v.  Drew,  2  Macq.  103;  New  Brunswick  Ry. 
Co.  V.  Conybeare,  9  H.  L.  711 ;  Barwick  v.  English,  etc.  Bank,  2  Exch. 
259. 

2  Odgers,  Lib.  &  Slan.,  §  868. 

3 Buffalo  Oil  Co.  v.  Oil  Co.,  106  N.  Y.  669;  Reed  v.  Bank,  130  Mass. 
443;  Krulevitz  v.  Railway,  140  Mass.  573;  Western  News  Co.  v.  Wil- 
iiiarth,  33  Kan.  510;  Jordon  v.  Alabama  R.  Co.,  74  Ala.  85. 

■*  Wheeler,  etc.  Mfg.  Co.  v.  Boyce,  36  Kan.  350;  Lake  Erie  Ry.  Co. 
V.  Acres,  108  Ind.  548;  First  Nat.  Bank  v.  Graham,  100  U.  S.  699; 
Gruber  v.  Washington,  etc.  R.  Co.,  92  N.  C.  1. 

5  Salt  Lake  City  v.  Hollister,  118  U.  S.  250. 


222  TOETS.  [§  163. 

that  the  act  from  which  the  tort  resulted  was  ultra  vires} 
For  example,  a  corporation  cannot  defeat  liability  for  an 
injury  caused  b}'^  the  negligence  of  an  officer  on  a  steam- 
boat with  the  plea  that  the  running  of  the  steamboat 
was  ultra  vires,  it  being  chartered  only  as  a  railroad  and 
banking  company.^  So  a  corporation  was  held  liable 
in  damages  for  its  conductor's  forcible  osculation  of  a 
lady  passenger,  for  it  was  the  duty  of  the  conductor,  how- 
ever great  the  temptation  might  have  been,  to  smother 
and  subdue  his  amatory  emotions,  and  protect  passengers 
from  wanton  insult.'  And  where  there  has  been  acquies- 
cence and  ratification  by  the  corporation,  such  as  accept- 
ing the  benefits  of  an  ultra  vires  tort,  it  will  be  estopped 
from  pleading  ^dtra  vires* 

iGruber  v.  Washington,  etc.  R.  Co.,  92  N.  C.  1;  First  Nat.  Bank  v. 
Graham,  supra. 

2 Central  R.  Co.  v.  Smith,  76  Ala.  572;  s.  C,  52  Am,  Rep.  353. 

3Craker  v.  Chicago,  etc.  R.  Co.,  36  "Wis.  657.  See,  also,  generally, 
Stewart  v.  Brooklyn  R.  Co.,  90  N.  Y.  588;  Louisville,  etc.  R.  Co.  v. 
Kelley,  13  Am.  &  Eng.  R.  Cas.  1;  Gilliam  v.  South,  etc.  R.  Co.,  15  id. 
138;  Bryan  v.  Chicago,  etc.  R,  Co.,  16  id.  335;  International,  etc.  R. 
Co.  V.  Kentle,  id.  337;  Louisville,  etc.  R.  Co.  v.  Flemming,  18  id.  347; 
Heenrich  v.  Pullman  Co.,  id.  379;  Miller  v.  Burlington,  etc.  R.  Co.,  8 
Neb.  219;  Alexander  v.  Relfe,  74  Mo.  495. 

*  Alexander  v.  Relfe,  supra.  Mr.  Taylor,  in  his  excellent  work  on 
Private  Corporations,  §  336,  in  discussing  the  general  doctrine  as  to 
the  liability  of  corporations  for  the  torts  of  their  agents,  says:  "If 
the  corporation,  acting  within  the  scope  of  its  corporate  authority, 
employs  agents  or  servants  in  such  a  manner  as  to  put  it  within  their 
power  to  cause  a  violation  of  a  duty  owed  by  the  corpoi'ation,  the 
corporation  will  not  be  sustained  in  the  defense  that  the  violation 
complained  of  was  not  authorized  by  it.  And  thus  it  is  if  the  tort 
was  committed  in  the  course  of  an  employment,  or  in  connection 
with  transactions  which  the  corporation  had  completely  authorized 
or  acquiesced  in,  and  the  duty  owed  by  the  corporation  is  violated 
by  the  tort,  it  will  be  no  valid  defense  to  the  corporation  that  the 
tort  itself  was  not  only  unauthorized,  but  was  even  ultra  vires  the 
corporation.    To  the  tort  itself,  under  such  circumstances,  the  doc- 


§  164.]  TORTS.  225 

§104.  Authority  of  agent  infixing  liaMlitg. —  To  fix 
the  liability  of  the  corporation  for  the  tortious  act  of  one 
of  its  agents  or  employees,  done  in  obedience  to  com- 
mands of  its  officers,  the  act  must  be  connected  with  the 
transaction  of  the  business  for  which  the  company  was 
incorporated.  For  the  acts  of  the  servant,  within  the 
general  scope  of  his  employment,  while  engaged  in  his 
master's  business  and  the  master's  interest,  the  master 
will  be  responsible,  whether  the  act  be  done  negligently, 
wantonly,  or  even  wilfully.^  In  Brokaw  v.  Railroad  Co., 
32  K  J.  L.  328,  Depue,  J.,  discussing  this  point,  said : 
"In  considering  the  question  whether  the  agent  has  the 
authority  of  the  corporation,  so  as  to  make  it  answerable 
for  his  act,  the  purpose  for  which  the  company  was  in- 
corporated must  not  be  overlooked.  An  authority  given 
even  by  the  board  of  directors  in  express  terms  will  not^ 
in  all  cases,  be  the  authority  of  the  corporation.  The 
directors  are  only  agents  themselves,  and  their  powers 
are  necessarily  limited  within  the  scope  of  the  purposes- 
for  which  the  corporation  was  created,  beyond  which  the}'" 
are  not  authorized  to  bind  the  corporation.  ...  If 
the  directors  should  order  an  agent  to  take  a  person  out 
of  his  house  and  beat  him,  the  corporation  could  not  be 
held  for  an  assault  and  battery ;  or  if  the  directors  of  a 
banking  company  should  purchase  a  steamboat  and  en- 
trine  of  ultra  vires  has  no  application;  but  it  does  apply  where  the 
employment  in  the  course  of  which,  or  the  transaction  in  connec- 
tion with  which,  the  tort  was  committed  was  ultra  vires  the  corpo- 
ration," 

iMott  V.  Ice  Co.,  73  N.  Y.  543;  Miller  v.  Burlington  R.  Co.,  8  Neb. 
219;  Goodspeed  v.  Bank,  23  Conn,  580;  Gillette  v.  Missouri,  etc.  R, 
Co.,  55  Mo.  315;  Brokaw  v.  New  Jersey,  etc.  R.  Co.,  33  N.  J.  328,  333; 
Helfrich  v.  Williams.  84  Ind.  553;  Illinois  Cent.  R.  Co.  v.  Downey,  18 
111.  260;  Hussey  v.  King,  98  N.  C.  34;  Hood  v.  Railroad  Co.,  33  Conn. 
502;  Taylor,  Priv.  Corp,,  §  341. 


224  TORTS.  [§  164. 

gage  in  transporting  passengers,  the  corporation  would 
be  liable  for  the  misfeasance  or  non-feasance  of  agents 
employed  in  that  business.  But  if  the  directors  of  a  cor- 
poration, having  power  to  hold  lands,  order  an  agent  to 
enter  on  lands  and  take  possession  of  them  for  the  legiti- 
mate uses  of  the  company,  his  entry,  if  unlawful,  will  be 
the  trespass  of  the  corporation.  So  if  the  directors,  act- 
ing in  their  official  capacity,  adopt  rules  and  regulations 
for  the  transaction  of  the  corporate  business  of  the  com- 
pany, and  provide  for  the  enforcement  of  those  rules  and 
regulations,  and  authorize  its  agents  or  servants  to  carry 
them  into  effect,  the  corporation  will  be  liable  for  the 
acts  of  such  agents  or  servants  in  the  course  of  such  em- 
ployment." 


CHAPTER  XII. 

POWERS  AND  LIABILITIES  OF  FOREIGN  AND  DE  FACTO 
CORPORATIONS. 

§  165.  General  powers  of  foreign  corporations. 

166.  The  absence  of  prohibitory  legislation  presumes  a  tacit  adop- 

tion of  foreign  laws. 

167.  Contractual  powers  similar  to  domestic  corporation. 

168.  De  facto  corporation  — Estopped  to  deny  corporate  existence. 

§  165.  General  powers  of  foreign  corporations. —  It  is  a 
general  rule  so  universally  accepted,  as  to  need  no  citation 
of  authorities,  that  a  corporation  created  by  a  state  can 
exercise  none  of  the  functions  or  privileges  conferred  by 
its  charter  in  any  other  state,  except  by  the  comity  and 
consent  of  the  latter.  By  the  law  of  comity  among  na- 
tions, a  corporation  created  by  one  sovereignty  is  permitted 
to  make  contracts  in  another  and  to  sue  in  its  courts;  and 
the  same  law  of  comity  prevails  among  the  several  sover- 
eignties of  this  Union.  The  comity  of  suit  brings  with  it 
the  comity  of  contract;  and  where  one  is  adopted  the 
other  must  be  presumed.^  Every  power  which  a  corpo- 
ration exercises  in  another  state  depends  for  its  validity 
upon  the  laws  of  the  sovereignty  in  which  it  is  exercised ; 
and  a  corporation  can  make  no  valid  contract  without 
their  sanction,  express  or  implied.  Courts  of  justice  have 
always  expounded  and  executed  contracts  made  by  cor- 
porations in  a  foreign  country  according  to  the  laws  of 
the  place  in  which  they  are  made;  provided  that  law  was 

1  Bank  of  Augusta  v.  Earle,  13  Pet.  (U.S.)  519;  Tombigbie,  etc.  Co. 
V.  Kneeland,  4  How.  (U.  S.)  16. 
15 


226  rOEEIGN    AND   DE   FACTO   COEPOEATIONS.  [§  1G6^ 

not  repugnant  to  the  laws  or  policy  of  their  own  country. 
The  comity  thus  extended  to  other  nations,  it  has  been 
said,  is  no  impeachment  of  sovereignty.  It  is  the  volun- 
tary act  of  the  nation  by  which  it  is  offered,  and  is  inad- 
missible when  contrary  to  its  policy  or  prejudicial  to  its 
interests.^ 

§  106.  The  ahsence  of  proMMtory  legislation  presumes 
a  tacit  adoption  of  foreign  laivs. —  In  the  silence  of  any 
positive  rule  affirming  or  denying  or  restraining  the 
operation  of  foreign  laws,  courts  of  justice  presume  the 
tacit  adoption  of  them  by  their  own  government,  unless 
they  are  repugnant  to  its  policy  or  prejudicial  to  its  in- 
terests.2  Accordingly  it  is  held  that  where  there  is  no 
prohibitory  legislation  or  action  by  a  state  excluding  for- 
eign corporations,  individual  citizens  cannot  complain  be- 
cause a  foreign  corporation  is  doing  business  in  the  state.^ 
Agreeably  to  the  foregoing  principles,  a  corporation  of 
one  state,  not  forbidden  by  the  laAvs  of  its  being,  may 
exercise  within  any  other  state  the  general  powers  con- 
ferred by  its  own  charter,  unless  it  is  prohibited  from  so 
doing  either  by  the  direct  enactments  of  the  latter  state, 
or  by  its  public  policy  to  be  deduced  from  the  general 
course  of  its  legislation,  or  from  the  settled  adjudications 
of  its  highest  court.* 

1  Bank  of  Augusta  v.  Earle,  supra, 

2  Story,  Conf.  Laws,  pp.  36,  37. 

sPensacola  Tel.  Co.  v.  Western  Union  Tel.  Co.,  96  U.  S.  1. 

4  Christian  Union  v.  Yount,  101  U.  S.  352;  Tombigbie,  etc.  Co.  v. 
Kneeland,  4  How.  (U.  S.)  16;  Cowell  v.  Springs  Co.,  100  U.  S.  55;  Will- 
iams V.  Creswell,  51  Miss.  817;  Silver  Lake  Bank  v.  North,  4  John.  Ch. 
370;  Bard  v.  Poole,  12  N.  Y.  495;  Merrick  v.  Van  Santford,  34  N.  Y. 
208;  British  Am.  Land  Co.  v.  Ames,  9  Mete.  (IMass.)  391;  Martin  v. 
Mobile,  etc.  R.  Co.,  7  Bush  (Ky.),  116;  Guaga  Iron  Co.  v.  Dawson,  4 
Blackf,  (Ind.)  202;  Leasure  v.  Life  Ins.  Co.,  91  Pa.  St.  491;  Dodge  v. 
City  of  Council  Bluffs,  57  Iowa,  560;  Frazier  v.  Wilcox,  4  Rob.  (La.) 


§§  167,  1G8.]       FOREIGN   AND   DE   FACTO    CORPORATIONS.        227 

§  167.  Contractual  poivers  similar  to  domestic  corimra- 
tion. — Any  foreign  corporation  doing  business  in  a  state 
under  permission  of  the  legislature  of  such  state  must  be 
deemed  as  to  its  contracts  made  in  the  course  of  such 
business  to  possess  the  powers  and  be  subject  to  all  the  lia- 
bilities of  similar  domestic  corporations  as  adjudicated 
by  the  courts  of  that  state.^  It  must  be  borne  in  mind, 
then,  that  two  questions  should  be  considered  in  deter- 
mining the  contractual  powers  of  a  foreign  corporation : 
first,  whether  it  has  been  endowed  with  the  power  in  the 
state  of  its  creation ;  and  second,  conceding  the  original 
existence  of  the  power,  whether  the  state  in  which  it  pro- 
poses to  exercise  the  power  will  permit  such  exercise. 
These  questions  being  resolved,  such  corporations,  gen- 
erally speaking,  are  governed  by  the  same  principles  and 
rules  of  law  as  are  applicable  to  domestic  corporations. 

§  168.  De  facto  corporations  —  Estopped  to  deny  corpo- 
rate existence. —  Where  a  corporation  is  proceeding  in  the 
performance  of  corporate  functions,  and  the  public  are 
dealing  with  it  on  the  supposition  that  it  is  what  it 
professes  to  be,  and  the  questions  suggested  are  only 
whether  there  has  been  exact  regularity  and  strict  com- 

517;  Life  Association  v.  Levy,  33  La.  Ann.  1203;  Kennebec  Co.  v. 
Insurance  Co.,  6  Gray  (Mass.),  204;  Flash  v.  Conn,  16  Fla.  428;  New- 
burg  Petroleum  Co  v.  Weare,  27  Ohio  St.  343;  Western  Union  Tel. 
Co.  V.  Mayer,  28  Ohio  St.  521;  Santa  Clara  F.  Acad.  v.  Sullivan,  116 
111.  375;  Baltimore,  etc.  R.  Co.  v.  Glenn,  28  Md.  287;  Wood  Hydraulic 
Co.  v.  King,  45  Ga.  34;  Home  Ins.  Co.  v.  Davis,  29  Mich.  238;  Kerch- 
ner  v.  Gettys,  18  S.  C.  521;  Taylor,  Priv.  Corp.,  §  384;  8  Am.  &  Eng. 
Ency.  Law,  331,  332,  and  cases  cited. 

iMilnor  v.  New  York,  etc.  R.  Co.,  53  N.  Y.  363;  Bard  v.  Poole,  12 
N.  Y.  495;  Silver  Lake  Bank  v.  North,  4  John.  Ch.  370;  McGregor 
V.  Erie  R.  Co.,  35  N.  J.  L.  115;  Bank  of  Augusta  v.  Earle,  13  Pet.  (U.  S.) 
539;  Lewis  v.  Bank  of  Ky.,  12  Ohio,  132;  Pierce  v.  Crompton,  13 
R.  I.  312. 


22S  FOKEIGX    AND    DE    FACTO    CORPOEATIONS.  [§  168. 

pliance  with  the  provisions  of  the  law  relating  to  incor- 
poration, in  controversies  between  such  cle  facto  corpora- 
tion and  those  w^ho  have  entered  into  contract  relations 
with  it,  it  will  be  estopped  from  denying  the  legality  of 
its  corporate  organization  and  existence.^  So  one  who 
deals  with  a  corporation  as  existing  in  fact  will  also 
be  estopped  to  deny  as  against  the  corporation  its  legal 
incorporation  when  sued  on  his  contract.^  So,  also,  it  is 
the  general  rule  of  law  that  the  regularity  and  validity 
of  the  organization  of  a  corporation,  effected  under  color 
of  its  charter,  cannot  be  impeached  in  any  collateral  pro- 
ceeding, and  the  acts  of  its  officers  de  facto  under  color 
of  an  election  are  valid  and  binding  upon  the  corpora- 
tion.'   And  where  a  corporation  assumed  to  act  before 

1  McCuUough  V.  Insurance  Co.,  46  Ala.  376;  Empire  Mfg.  Co.  v. 
Stewart,  46  Mich.  482;  Dooley  v.  Chesire  Glass  Co.,  15  Gray  (IMass.), 
494;  Merrick  V.  Eeynolds  Engine  Co.,  101  Mass.  381;  Humphrey  v. 
Patrons'  Merc.  Ass'n,  50  Iowa,  607;  Close  v.  Glenwood  Cemetery,  107 
U.  S.  466;  Swartout  v.  Michigan,  etc.  R.  Co.,  24  Mich.  389;  Bakers- 
field,  etc.  Ass'n  v.  Chester,  55  Cal.  98;  Ewing  v.  Robeson,  15  Ind. 
20:  Hammond  v.  Straus,  53  Md.  1;  Priest  v.  Hat  Co.,  115  Mass.  380; 
Salem  Nat.  Bank  v.  Almy,  117  Mass.  476;  Chamberlin  v.  Huguenot 
Mfg.  Co.,  118  Mass.  533;  Rush  v.  Steamboat  Co.,  84  N.  C.  70:  Whit- 
ney V.  Wyman,  101  U.  S.  393;  Upton  v.  Hansborough,  3  Biss.  (U,  S.) 
417:  Taylor,  Priv.  Corp.,  §  146. 

2  Taylor,  Priv.  Corp.,  §  146;  Frost  v.  Frostburg  Coal  Co.,  34  How. 
(U.  S.)  378;  French  v.  Donohue,  29  Minn.  Ill;  Johnston  Harvester 
Co.  V.  Clark,  30  Minn.  308;  Franz  v.  Building  Ass'n,  34  Md.  259; 
Keene  v.  Van  Reuth,  48  Md.  184;  Ramsey  v.  Insurance  Co.,  55  111. 
311;  Stoutimore  v.  Clark,  70  Mo.  471;  Studebaker  Co.  v.  Montgom- 
ery, 74  Mo.  101;  Beatty  V.  Bartholomew,  etc.,  76  Ind.  91;  Smelser 
v.  Turnpike  Co.,  83  Ind.  417;  Butchers'  Bank  v.  McDonald,  130  Mass. 
264;  Spahr  v.  Bank,  94  Pa.  St.  429;  Jones  v.  Bank,  8  B.  Mon.  (Ky.) 
123. 

3  Attorney-General  v.  Stevens,  1  N.  J.  Eq.  369;  National  Docks  v. 
Railway  Co.,  5  Stew.  (N.  J.)  755;  Knight  v.  Corporation,  Lutw.  508; 
In  re  Assurance  Co.,  5  Ch.  App.  388;  Mahoney  v.  Mining  Co.,  7  H.  L. 
869;  Hackensack  Water  Co.  v.  Dekay,  36  N.  J.  Eq.  548. 


§  IGS.]  FOREIGN   AND   DE    FACTO   CORPORATIONS.  229 

the  amount  of  its  capital  stock  had  been  taken  and  ten 
per  cent,  of  that  amount  had  been  paid  in,  and  with- 
out a  compliance  with  this  condition,  it  w^as  held  that 
it  had  exceeded  its  powers  in  thus  commencing  and 
prosecuting  its  business;  that  such  action  was  ^iltra  vires 
and  -void,  and  any  promise  or  undertaking  which  induced 
it  to  pursue  such  a  course  was  in  contravention  of  the 
law  and  coukl  not  be  invoked  an  an  estoppel  in  a  suit  to 
recover  the  amount  of  stock  subscribed.^  So  where  a 
corporation  continued  to  prosecute  its  business  in  its  cor- 
porate name  just  as  it  had  done  before  its  charter  ex- 
pired, after  the  expiration  of  its  legal  right  to  exist,  it 
was  held  to  have  become  a  corporation  de  facto,  and  that 
the  acts  and  dealings  had  by  and  with  it  were  not  nec- 
essarily legally  ineffective  and  of  no  binding  force.^ 

^  Academy  of  Music  v.  Flanders  Brothers,  75  Ga.  14;  Hackensack 
Water  Co.  v.  Dekay,  36  N.  J.  E.  548. 

2  Miller  v.  Newberg  Coal  Co.,  31  W.  Va.  836;  Mor.  Priv.  Corp., 
g§  1003,  1003;  St.  Louis  Gas  Light  Co.  v.  St.  Louis,  11  Mo.  App.  55; 
Briggs  V.  Cape  Cod  Canal  Co.,  137  Mass.  71. 

In  Miller  v.  Coal  Co.,  supra,  the  court  say:  "The  principle,  it 
seems  to  me,  to  be  deduced  from  our  statute  and  these  author- 
ities is  that  a  private  business  corporation,  acting  and  carrying 
on  its  corporate  business  in  its  corporate  name  after  its  legal  ex- 
istence has  ended  by  the  expiration  of  its  charter,  must  be  held 
to  be  a  corporation  de  facto;  and  that  as  such,  so  long  as  it  in 
fact  carries  its  business  and  contracts  and  incurs  liabilities  with  or 
to  third  persons  dealing  with  it  as  such  de  facto  corporation,  it  may 
sue  and  be  sued  at  law,  either  in  actions  ex  contractu  or  ex  delicto, 
and  it  cannot  defeat  such  action  by  alleging  that  its  charter  had 
expired  before  the  cause  of  action  arose." 

Hackensack  Water  Co.  v.  Dekay,  supra,  was  a  case  where  a  water 
company  was  incorporated  in  1869  with  a  capital  of  $50,000.  The 
charter  provided  for  an  organization  as  soon  as  $20,000  of  the  capital 
stock  should  be  subscribed  and  paid  in.  In  1873  the  corporation 
was  organized  and  directors  elected.  Very  little  of  the  stock  had 
been  subscribed,  and  less  of  it  had  been  paid  in.  The  directors  were 
not  qualified  for  the  office  and  were  irregularly  chosen.    Under  this 


2o0  FOREIGN   AND    DE    FACTO   CORrORATIONS.  [§  1G8. 

organization  the  company  bought  and  took  title  for  lands  in  its 
own  name,  constructed  its  works,  acquired  property  to  a  consider- 
able amount  and  contracted  debts  to  a  larger  amount.  The  charter 
authorized  the  company  to  increase  its  capital  stock  to  $100,000. 
The  charter  also  empowered  the  company  to  borrow  money  not  ex- 
ceeding two-thirds  of  the  capital  paid  in,  and  to  secure  the  same  by 
bonds  and  mortgage  upon  the  property  and  franchises.  In  August, 
1873,  a  resolution  was  passed  to  increase  the  capital  to  $100,000.  In 
September,  1873,  the  directors  adopted  a  resolution  that  one  hundred 
and  thirty-three  bonds  of  $500  each  be  issued,  paj'able  to  a  trustee  or 
bearer,  with  coupons  for  the  semi-annual  interest.  The  bonds  au- 
thorized by  this  resolution,  and  in  fact  issued,  amounted  to  $66,500, 
nearly  two-thirds  of  the  capital  authorized  when  increased.  At 
that  time  not  over  $3,000  of  capital  had  been  paid  in.  In  a  suit  to 
foreclose  a  mortgage  made  in  pursuance  of  this  resolution  by  the 
company,  duly  executed  under  the  corporate  seal,  it  was  held  that 
the  corporation  was  a  corporation  de  facto  and  its  directors  offi- 
cers de  facto,  and  that  the  acts  of  the  latter  were  binding  on  the 
corporation.  Further,  that  the  mortgage  being  within  the  powers 
granted  by  the  charter,  and  on  its  face  having  the  appearance  of 
being  within  the  company's  power  to  mortgage,  was  a  valid  security 
in  favor  of  bona  fide  holders  of  the  bonds,  notwithstanding  the  di- 
rectors acted  illegally  in  making  the  mortgage  and  the  bonds,  and 
putting  the  bonds  in  circulation  without  first  obtaining  subscrip- 
tions to  the  capital  to  be  made  and  paid  in  suflScient  amount  to 
justify  them  in  making  the  mortgage. 


CHAPTER  XIII. 

THE   DOCTRINE   OF   ULTRA  VIRES   APPLIED  TO  MUNICI- 
PAL CORPORATIONS. 

GENERAL   MUNICIPAL   POWERS. 

§  169.  Introductory  —  Nature  of  municipal  corporation. 

170.  Exercise  of  municipal  powers. 

171.  Ordinances  —  Power  to  enact. 

172.  Nature  and  effect  of  ordinances. 

173.  Ministerial  and  judicial  ordinances  distinguished. 

174.  Effect  of  ultra  vires  ordinances. 

175.  Instances  of  ultra  vires  ordinances. 

176.  Ordinances  must  be  reasonable. 

177.  Courts  cannot  interfere  with  discretion  of  municipality. 

178.  Courts  may  restrain  passage  of  ultra  vires  ordinances. 

179.  Powers  as  to  taxation. 

180.  Power  to  tax  may  be  revoked. 

181.  Power  can  be  exercised  only  for  public  purposes. 

182.  Taxation  and  power  to  license  distinguished. 

183.  Power  to  exercise  right  of  eminent  domain. 

184.  Eminent  domain  and  taxation  distinguished. 

185.  Powers  as  to  property. 

186.  Powers  of  divided  municipality. 

187.  As  to  extinguished  municipality. 

§  169.  Introductory  —  Nature  of  mimicipal  corpora- 
tions.—  The  underlying  principle  of  municipal  govern- 
ment is  that  the  management  of  local  affairs  shall  be 
intrusted  to  local  authorities,  while  general  affairs  are 
left  to  the  state  legislature.  Under  the  power  given  by 
constitutions  to  general  assemblies  to  provide  for  the  or- 
ganization of  cities  and  incorporated  villages,  these  cor- 
porations are  made  the  depositaries  of  certain  limited 
governmental  powers,  to  be  exercised  on  behalf  of  the 


232  MUNICIPAL    COKPOKATIONS.  [§  ITO,. 

state  for  the  public  welfare.^  They  are  agencies  or  in- 
strumentalities to  which  the  general  assembly,  vested 
Avith  the  legislative  power  of  the  state,  delegates  a  por- 
tion of  its  governmental  power  in  order  to  meet  those 
local  wants  of  the  people  in  cities  and  villages  for  which 
state  laws  make  only  general  provisions,  leaving  a  more 
particular  provision  to  local  councils.^ 

§  170.  Exercise  of  general  municipal  powers. —  The 
manner  and  extent  to  which  governmental  powers  dele- 
gated to  municipal  corporations  for  the  public  good  are 
to  be  exercised  must  rest  in  a  large  measure  in  their  judg- 
ment and  discretion ;  but,  acting  as  state  instrumentalities, 
they  cannot  be  held  liable  to  individuals  for  a  defect  in  the 
execution  of  such  powers,  unless  a  right  of  action  is  given 
by  statute.^  Municipal  corporations  can  exercise  only 
such  powers  as  are  expressly  granted  to  them,  or  such  as 
are  necessary  to  carry  into  effect  those  that  are  granted.^ 

1  City  of  Toledo  v.  Cone,  41  Ohio  St.  149. 

2  City  of  Toledo  v.  Cone,  supra. 

3  City  of  Toledo  v.  Cone,  5  Am.  &  Eng.  Corp.  Cas.  623;  Wheeler  v. 
Cincinnati,  19  Ohio,  19;  Western  College  v.  Cleveland,  13  Ohio  St. 
375. 

*  Richards  v.  Clarksburg,  30  W.  Va.  491 ;  Parkersburg  Gas  Co.  v. 
Parkersburg,  etc.  Co.,  30  W.  Va.  435;  Grand  Rapids,  etc.  Co.  v.  Grand 
Rapids,  etc.  Co.,  35  Mich.  265;  Petersburg  v.  Metzker,  21  111.  205; 
People  V.  Weber,  89  111.  347;  Mather  v.  Ottawa,  114  111.  659;  New 
London  v.  Brainerd,  32  Conn.  552;  Bridgeport  v.  Railway  Co.,  15 
Conn.  475:  Somerville  v.  Dickerman,  127  Mass.  272;  Roylston  Market 
V.  Boston  Association,  113  Mass.  528;  Clark  v.  Davenport,  14  Iowa, 
494;  Keokuk  v.  Scroggs,  39  Iowa,  447;  Hauger  v.  Des  Moines,  53 
Iowa,  193;  Green  v.  Cape  May,  41  N.  J.  L.  45;  State  v.  Passaic,  41 
N.  J.  L.  90;  Fulton  v.  Lincoln,  9  Neb.  358;  Hurford  v.  Omaha,  4  Neb. 
350;  Brenham  v.  Water  Co.,  67  Tex.  543;  Williams  v.  Davidson,  43 
Tex.  33;  Allen  v.  Galveston,  51  Tex.  302;  People  v.  Bank,  1  Doug. 
(Mich.)  282;  Smith  v.  Newburgh,  77  N.  Y.  130;  Francis  v.  Troy,  74 
N.  Y.  338;  Paine  v.  Spratley,  5  Kan.  525;  State  v,  Marion  Co.,  21. 


§  ITl.]  MUNICIPAL   COEPOKATIONS.  233 

lio  powers  can  be  implied  except  such  as  are  essential  to 
the  objects  and  purposes  of  the  corporation  as  created 
and  established.  To  the  extent  of  their  authority  they 
can  bind  the  people  and  the  property  subject  to  their 
regulation  and  governmental  control  by  what  they  do, 
but  beyond  their  corporate  powers  their  acts  are  of  no 
efleect.^ 

§  171.  Ordinances  —  Potver  to  enact. —  Municipal  ordi- 
nances are  laws  passed  by  the  governing  body  of  a  mu- 
nicipal corporation  for  the  regulation  of  the  affairs  of  the 
corporation.  They  are  not  merely  rules  or  regulations 
in  the  ordinary  sense  of  those  terms,  but  they  are  in  the 
nature  of  laws,  being  decreed  by  a  body  vested  with  defi- 
nite legislative  authority,  coupled  with  power  to  enforce 
obedience  to  its  enactments.^  The  legislature  may  dele- 
gate to  a  municipal  corporation  the  power  to  enact  ordi- 

Kan.  419;  Hayes  v.  Appleton,  24  Wis.  544;  Lord  v.  Oconto,  47  Wis. 
386;  Kansas  City  v.  Flanagan,  69  Mo.  22;  Kelly  v.  Meeks,  87  Mo. 
396;  St.  Louis  v.  Bell  Tel.  Co.,  96  Mo.  623;  St.  Paul  v.  Traeger,  25 
Minn.  248;  Bentley  v.  County  Com'rs,  25  Minn.  259;  Mayor,  etc.  v. 
Moag,  53  Ala.  561;  Selma  v.  Mullen,  46  Ala.  411;  McCracken  v.  San 
Francisco,  16  Cal.  591;  McCoy  v.  Briant,  53  Cal.  247;  Glass  v.  Ash- 
bury,  49  Cal.  571;  Vance  v.  Little  Rock,  30  Ark.  435;  De  Russey  v. 
Davis,  13  La.  Ann.  468;  Louisiana  State  Bank  v.  Navigation  Co.,  3 
La.  Ann.  294;  Walker  v.  Cincinnati,  21  Ohio  St.  14;  Bloom  v.  Xenia, 
32  Ohio  St.  461;  Indianapolis  v.  Ind.  etc.  Co.,  66  Ind.  396;  Cullen  v. 
Carthage,  103  Ind.  196;  Nichol  v.  Mayor,  etc.,  9  Humph.  (Tenn.)252; 
Head  v.  Pro  v.  Ins.  Co.,  2  Cranch  (U.  S.),  128;  Minturn  v.  Larue,  23 
How.  435;  Kirkham  v.  Russell,  76  Va.  956;  Peters  v.  Lynchburg,  76 
Va.  927;  Logan  City  v.  Buck,  3  Utah,  301;  Blake  v.  Mayor,  53  Ga. 
177;  Sherman  v.  Carr,  8  R.  I.  431;  Henderson  v.  Covington,  14  Bush 
(K3\),  312;  Alley  v.  Inhabitants,  etc..  53  Me.  446;  Weith  v.  Wilming- 
ton, 68  N.  C.  24;  Tread  way  v.  Schrauber,  1  Dak.  236;  Leonard  v. 
Canton,  36  Miss.  189. 

1  Ottawa  V.  Carey,  108  U.  S.  110;  1  Dill.  Mun.  Corp.,  §  89,  and  cases 
cited. 

2  Horr  &  Bemis,  Munic.  Ord.,  g§  1,  2. 


23i  MUNICIPAL    COKPOKATIONS.  [§  172. 

nances  for  the  government  of  the  municipality,  and,  if  the 
organic  law  contains  nothing  restricting  the  exercise  of 
the  power  to  any  particular  part  of  the  municipal  body, 
it  may  be  conferred  upon  any  department  thereof,  as  may 
appear  to  be  most  just  and  expedient  in  the  judgment  of 
the  legislature.^ 

§172.  Nature  and  effect  of  ordinances. —  Ordinances 
are  to  be  made  in  subordination  and  not  contrary  to  the 
general  laws  of  the  state.  Still,  they  go  far  beyond  the 
general  laws  in  prescribing  the  civil  conduct  of  persons  in 
relation  to  their  conduct  and  property.  In  order  to  make 
these  additional  regulations  binding,  the  charter  of  the 
city  must  be  put  in  operation  by  an  organization,  or  by 
the  action  of  officers  under  it.^  Public  policy  demands 
the  delegation  of  various  powers  of  local  legislation  to 
the  municipal  body,  and  ordinances  enacted  in  the  execu- 
tion of  these  powers  have,  within  the  limits  of  the  corpo- 
ration, the  force  of  laws.  They  are  just  as  binding  as  the 
laws  of  the  state  and  general  government;  they  are  en- 
forced in  a  similar  manner  and  under  like  rules  of  con- 
struction.'  A  grant  of  power  to  pass  ordinances  is  under- 

1  Boone,  Corp.,  §292;  St.  Paul  v.  Coulter,  12  Minn.  41;  State  v. 
Clark,  8  Fost.  176;  Trigally  v.  Memphis,  6  Coldw.  (Tenn.)  382;  Hill 
V.  Decatur,  22  Ga.  203;  Brieswick  v.  Mayor,  etc.,  51  Ind.  639;  Horn 
V.  People.  26  Mich.  221;  Blanchard  v.  Bissell,  11  Ohio  St.  96;  St. 
Louis  V.  Bank,  49  Mo.  574;  Heland  v.  Lowell,  3  Allen  (Mass.),  407; 
Gas  Co.  V.  San  Francisco,  6  Cal.  190;  Kepner  v.  Comm.,  40  Pa.  St, 
124;  Sower  v.  Philadelphia.  85  Pa.  St.  231;  Blazier  v.  Miller,  10  Hun 
(N.  Y.),  435;  People  v.  Special  Sessions,  10  Hun  (N.  Y.),  214 

2  Williams  v.  Davidson,  43  Tex.  1. 

3Horr  &  Bemis,  §2;  Dill.  Mun.  Corp.,  §308;  Sedgw.  Stat.  Law, 
462;  Bish.  Stat.  Cr.,  §  11;  Cooley,  Const.  Lim.  211;  Jones  v.  Insurance 
Co.,  2  Daly  (N.  Y.),  307;  McDermott  v.  Board.  5  Abb.  Pr.  (N.  Y.)  422 
Milne  v.  Davidson,  5  Martin  (La.),  409;  State  v.  Williams,  11  S.  C, 
288;  Gabel  v.  Houston,  29  Tex.  336;  Bearden  v.  Madison,  73  Ga.  184 
Heland  v.  Lowell,  3  Allen  (Mass.),  407;  State  v.  Tryou,  39  Conn.  183; 


§  173.]  MUNICIPAL   CORPOKATIONS.  235 

stood  to  be  subject  to  the  implied  limitation  that  they 
shall  not  be  contrary  to  the  general  laws  of  the  state.^ 
And  a  power  to  pass  ordinances  and  appoint  officers  to 
enforce  them  includes  all  necessary  power  to  make  such 
ordinances  effectual.^ 

§  173.  Ministerial  and  judicial  ordinances  distin- 
ffuished. —  The  true  principle  seems  to  be  that  ordinances 
directing  the  mere  repairing  or  repaying  of  streets,  or  the 
reconstruction  of  sewers  or  bridges,  which  are  enjoined 
upon  municipal  corporations  as  matters  of  duty,  are  purely 
ministerial;  while  ordinances  directing  new  streets  to  be 
opened  or  altered,  new  sewers  to  be  constructed,  or  other 
similar  public  improvements  to  be  made,  by  which  the 
property  of  individuals  is  taken  or  affected,  are  in  their 
nature  judicial.*  So  when  a  municipal  corporation  is 
authorized  by  ordinance  to  require  the  paving  of  streets, 
not  as  a  matter  of  ordinary  repair,  but  upon  specified  con- 
ditions only,  and  to  impose  the  burden  not  upon  the  city 
treasury,  but  upon  a  specified  class  of  individuals,  the 
ordinance  is  in  its  nature  judicial."*  Municipal  powers  re- 
quiring the  exercise  of  discretion  cannot  be  delegated,  yet 
such  corporations  may  appoint  agents  and  committees  to 
discharge  duties  of  an  administrative  or  ministerial  char- 
acter.* 

Hopkins  v.  Swanson,  4  M.  &  W.  621;  Burmeister  v.  Howard,  1  Wash, 
Ty.  207:  Wright  v.  Railroad  Co.,  7  111.  App.  438:  Cliurch  v.  City,  5 
Cow.  (N.  Y.)  538;  Mason  v.  Shawnee,  77  111.  533:  Bott  v.  Pratt,  33 
Minn.  323;  Gas  Co.  v.  Des  Moines,  44  Iowa,  508;  Starr  v.  Burlington* 
45  Iowa,  87;  Indianapolis  v.  Gas  Co.,  66  Ind.  396. 

1  St.  Louis  V.  Kaime,  2  Mo.  App.  66;  Canton  v.  Nist,  9  Ohio  St.  439; 
Thomas  v.  Richmond,  12  Wall.  (U.  S.)  349. 

2  Boone,  Corp.  §  292:  Reinhard  v.  New  York,  2  Daly  (N.  Y.),  243; 
State  V.  Cleveland,  3  R.  I.  117;  Roddy  v.  Finnegan,  40  Md.  490. 

3  Camden  v.  Mulford,  26  N.  J.  L.  49. 
*  Camden  v.  Mulford,  supra. 

estate  V.  Trenton,  42  N.  J.  L.  72;  Parker  v.  New  Brunswick,  1 


230  MUNICIPAL  COKPORATIOXS.  [§§  174, 175. 

§  174.  Effect  of  ultra  vires  ordinances. —  An  ordinance 
passed  by  a  municipal  corporation  which  it  has  no  power 
to  pass,  as  levying  a  tax  for  a  purpose  not  authorized  by 
its  charter,  is  an  act  of  usurpation,  and  all  proceedings 
under  it  are  void;  but  where  the  corporation  has  the 
jDower  to  pass  an  ordinance  for  a  certain  purpose,  but 
exercises  that  power  in  an  unauthorized  manner,  the  or- 
dinance is  valid  and  binding  until  set  aside  by  legal  pro- 
ceedings brought  for  that  purpose,  and  its  validity  cannot 
be  brought  in  question  collaterally  as  a  matter  of  defense 
to  an  action  under  it.^ 

§  175.  Instances  of  ultra  vires  ordinances. —  An  ordi- 
nance making  an  appropriation  of  the  funds  of  a  city^ 
derived  from  taxation,  for  purposes  wholly  beyond  the 
purview  of  municipal  government,  is  a  wrongful  appro- 
priation of  the  funds  held  in  trust  for  the  tax-payers  and 
people  to  pay  the  legitimate  expenses  of  the  city,  and  is 
illegal,  idtra  vires,  null  and  void.^     An  ordinance  passed 

Vroom  (N.  J.),  395;  State  v.  Paterson,  5  Vroom  (N.  J.),  163;  Dill. 
Mun.  Corp.,  §  60;  Meuser  v.  Risdon,  36  Cal.  239;  Mathews  v.  Alex- 
andria, 68  Mo.  115;  Gale  v.  Kalamazoo,  23  Mich.  344;  Lord  v.  Oconto, 
47  Wis.  386;  State  v.  Hauser,  63  Ind.  158;  Bradsall  v.  Clark,  73  N.  Y. 
73;  East  St.  Louis  v.  Wehrung.  50  III.  28;  Kininundy  v.  Mayham,  72 
111.  462;  State  v.  Fiske,  9  R.  I.  94;  Hydes  v.  Joyes.  4  Bush  (Ky.),  464; 
State  V.  Jersey  City,  25  N.  J.  L.  209;  State  v.  Newark,  47  N.  J.  L.  117; 
State  V.  Trenton,  51  N,  J.  L,  498;  Schenley  v.  Commissioners,  36  Pa. 
St.  62;  State  v.  Bell,  84  Ohio  St.  194;  Darling  v.  St.  Paul,  19  Minn. 
389. 

iCity  of  Camden  v.  Mulford,  26  N.  J.  L.  49;  Bergen  v.  Clark- 
son,  1  Halst.  (N.  J.)  352;  State  v.  Jersey  City,  5  Dutch.  (N.  J.)  175. 

^The  Liberty  Bell,  23  Fed.  Rep.  843;  Dill.  Mun.  Corp..  §  52;  Hood 
V.  Lynn,  1  Allen  (Mass.),  103;  Tash  v.  Adams,  10  Cush.  (Mass.)  252; 
Claflin  V.  Hopkinton,  4  Gray  (Mass.),  502;  Murphy  v.  Jacksonville, 
18  Fla.  318;  Grant  Co.  v.  Bradford,  72  Ind.  455;  Henderson  v.  Cov- 
ington, 14  Bush  (Ky.),  312;  Cornell  v.  Guilford,  1  Denio  (N.  Y.),  510; 
Halstead  v.  Mayor,  etc.,  3  N.  Y.  433;  New  London  v.  Brainerd,  22 
Conn.  552. 


§   176.]  MUNICIPAL    COKPORATIONS.  237 

by  the  city  council  of  New  Orleans  appropriating  $5,000 
to  pay  the  expenses  incurred  in  transporting  from  Phila- 
delphia to  said  city  and  return  the  "  Liberty  Bell "  ob- 
tained for  exhibition  at  the  "  World's  Industrial  and 
Cotton  Centennial  Exposition, "  and  also  for  paying  the 
expenses  of  a  "junketing  expedition  "  to  go  to  Philadel- 
phia, ostensibly  in  charge  of  said  bell,  though  patriotic 
and  praiseworthy,  was  held  illegal  and  void.'  So  an  or- 
dinance of  a  city  that  declares  it  unlawful  for  any  person, 
society,  association  or  organization,  under  whatsoever 
name,  to  parade  any  public  street,  avenue  or  alley  of  the 
city,  shouting,  singing  or  beating  drums  or  tamborines? 
or  playing  upon  any  other  musical  instrument,  etc., 
Avithout  first  having  obtained  in  writing  the  consent  of 
persons  named  in  the  ordinance,  is  illegal  and  void.^ 

§  176.  Ordinances  must  J)e  reasonaMe. —  Ordinances  to 
be  valid  must  be  reasonable.'  An  unreasonable  ordinance 
is  void.^    And  where  a  charter  expressly  grants  a  power, 

1  The  Liberty  Bell,  supra. 

2  Anderson  v.  City,  10  Pac.  Rep.  719;  Frazee's  Case,  30  N.  W.  Rep.  72; 
Sweet  V.  Wabash,  41  Ind.  7;  McConvill  v.  Jersey  City,  39  N.  J.  L.  38; 
Bronson  v.  Oberlin,  41  Ohio  St.  476;  Austin  v.  Mundy,  16  Pick.  (Mass.) 
121;  Duck  wall  v.  New  Albany,  25  Ind,  283;  Shallcross  v.  Jefferson- 
ville,  26  Ind.  193;  State  v.  White  (N.  H.),  5  Atl.  Rep.  828. 

estate  V.  Clark,  54  Mo.  17;  Coal  Float  v.  Jeffersonville,  112  Ind.  19; 
Chamberlain  v.  Evansville,  79  Ind.  542;  Corrigan  v.  Gage,  68  Mo. 
541;  Kirkham  v.  Russell,  76  Va.  956;  Baltimore  v.  Radecke,  49  Md. 
217;  Boston  v.  Shaw,  1  Met.  (Mass.)  130;  Comm.  v.  Worcester,  3  Pick. 
(Mass.)  462;  Delaware,  etc.  R.  Co.  v.  East  Orange,  41  N.  J.  L.  127; 
Kipp  V.  Mayor,  etc.,  2  Dutch.  (N.  J.)  298;  Dayton  v.  Quigley,  29  N.  J. 
Eq.  77;  People  v.  Troop,  12  Wend.  (N.  Y.)  183;  Ex  parte  Frank,  52 
Cal.  606;  Mayor,  etc.  v.  Winfield,  8  Humph.  (Tenn.)  767;  Walters  v. 
Leech,  3  Ark.  110;  Fisher  v.  Harrisburg,  2  Grant's  Cas.  (Pa.)  291; 
Mayor,  etc.  v.  Beasley,  1  Humph.  (Tenn.)  232;  Pedrick  v.  Bailey,  13 
Gray  (Mass.),  161;  State  v.  Freeman,  38  N.  H.  426;  Tugmau  v.  Chi- 
cago, 78  111.  405;  Clason  v.  Milwaukee,  30  Wis.  316. 

^Cooley,  Const.  Lim.  243;  Chicago  v.  Trotter,  26  N.  E.  Rep.  (111.)  359. 


238  MUNICIPAL   CORPORATIONS.  [§  17^. 

but  ])rescribes  neither  the  time  nor  the  mode  of  its  exer- 
cise, it  must  be  exercised  in  a  mode  and  at  a  time  deemed 
reasonable  by  the  court.^  An  ordinance  cannot  be  held 
to  be  unreasonable,  however,  if  expressly  authorized  by 
the  legislature.^  But  the  courts  will,  in  certain  cases,  de- 
clare a  municipal  ordinance  void,  simply  on  the  ground 
that  the  unreasonableness  of  the  ordinance  amounts  to 
an  abuse  of  authority,'  Thus,  an  ordinance  was  held  to 
be  unreasonable  and  so  void,  which  required  druggists 
to  furnish  quarterly  statements  of  the  kind  and  quantity 
of  intoxicating  liquors  sold  and  to  whom  the  sales  were 
made.*  Also  requiring  the  building  of  a  sidewalk  in  an 
uninhabited  portion  of  the  city.^  So  an  ordinance  requir- 
ing all  persons  who  sell  hay  or  other  produce,  who  deliver 
the  same  within  the  limits  of  the  city,  to  pay  a  fee  of  five 
cents,  was  held  unreasonable,  unauthorized  by  the  charter 
and  illegal :  not  because  the  fee  was  regarded  as  exorbi- 
tant and  would  have  a  tendency  to  restrain  trade  and 
hence  against  public  policy,  but  because,  under  the  gen- 
eral power  vested  in  the  council  of  passing  such  ordi- 
nances as  they  may  deem  expedient  for  regulating  the 
general  police  and  the  peace  and  good  order  of  the  city, 
there  was  no  power  to  impose  a  tax  on  persons  occupying 
market  stands  in  the  streets,  or  huckstering  or  selling 
produce,  by  way  of  raising  a  revenue.® 

1  Commissioners  v.  Gas  Co.,  12  Pa.  St.  318 ;  Comm.  v.  Robinson,  5  Cush. 
(Mass.)  438;  Davis  v.  Anita,  73  Iowa,  325;  Comm.  v.  Steffee,  7  Bush 
(Ky.),  161;  Ex  parte  Chin  Yan,  60  Cal.  78;  Gilham  v.  Wells,  64  Ga. 
192. 

2 Coal  Float  v.  Jeffersonville,  112  Ind.  19;  Chamberlain  v.  Evans- 
ville,  79  Ind.  542;  State  v.  Clark,  54  Mo.  17. 

3  Baltimore  v.  Radecke,  49  Md.  217. 

*  Clinton  v.  Philli])s,  58  111.  102. 

*  Corrigan  v.  Gage,  68  Mo.  541. 

8 Kip  V.  Paterson,  2  Dutch.  (N.  J.)  298;  State  v.  Mayor,  4  Vroom 
(N.  J.),  283;  State  v.  Jersey  City,  5  Vroom  (N.  J.),  431. 


§  177.]  MUNICIPAL   COKPOEATIONS.  239 

§  177.  Courts  cannot  interfere  tvith  discretion  of  mii- 
niciimlity' — Power  to  do  an  act  is  often  conferred  upon 
municipal  corporations  in  general  terms  without  being 
accompanied  with  any  prescribed  mode  of  exercising  it. 
In  such  a  case  the  council  necessarily  have,  to  a  certain 
extent,  a  discretion  as  to  the  manner  in  which  the  power 
shall  be  used.  This  discretion,  where  it  exists,  cannot  be 
judicially  interfered  with  or  questioned,  except  where  the 
power  is  exceeded,  or  fraud  is  imputed  or  shown,  or  there 
is  a  manifest  invasion  of  private  rights.^  So  if  a  city  has 
power  to  grade  streets,  the  courts  will  not  inquire  into 
the  necessity  of  the  exercise  of  it,  or  the  refusal  to  exer- 
cise it ;  nor  whether  a  particular  grade  adopted,  or  the 
particu  lar  mode  of  exercising  the  power,  i  s  j  udicious.^  The 
discretion  of  municipal  corporations  within  the  sphere  of 
their  powers  is  as  wide  as  that  possessed  by  the  govern- 
ment of  the  state.^  The  law-making  power  of  munici- 
pal corporations,  within  its  prescribed  limits,  is  as  much  a 
co-ordinate  branch  of  the  state  government  as  the  general 
assembly,  and  it  is  no  more  competent  for  the  judiciary 
to  interfere  w4th  the  legislative  acts  of  one  than  the 
other.*     A  tax-payer  cannot  set  the  courts  in  motion  to 

1  City  of  Topeka  v.  Huntoon  (Kan.),  33  Am.  &  Eng.  C.  C.  67;  Evans- 
ville  R.  Co.  V.  Evansville,  15  Ind.  395;  Kelly  v.  Milwaukee,  18  Wis. 
83;  Stack  v.  Maysville,  13  B.  Mon.  (Ky.)  1;  Bridgeport  v.  Housatonic 
R.  Co.,  15  Conn.  475;  Page  v.  St.  Louis,  20  Mo.  136;  Mayor  v.  Gill,  31 
Md.  375;  Union  Pacific  R  Co.  v.  Cheyenne,  113  U.  S.  516. 

2Teegarden  v.  Racine,  56  Wis.  545;  Sheridan  v.  Colvin,  78  111.  237; 
Hovey  v.  Mayo,  43  Me.  722;  Richmond  v.  McGirr,  78  Ind.  193. 

3  St.  Louis  V.  Boffinger,  19  Mo.  15;  Des  Moines  Gas  Co.  v.  Des 
Moines,  44  Iowa,  505. 

estate  V.  Swearingen,  12  Ga.  23;  Danilly  v.  Cabanness, 52  Ga.  Ill; 
Mayor  v.  Comak,  75  Ga.  429;  Satterthwaite  v.  Beaufort  Co.,  76 
N.  C.  153;  Wilson  v.  Charlotte,  74  N.  C.  748;  Inhabitants  v.  New  Or- 
leans, 14  La.  Ann.  455;  New  Orleans,  etc.  v.  Dunn,  51  Ala.  128;  Lock- 
wood  V.  St.  Louis,  24  Mo.  20;  Sheidley  v.  Lynch,  95  Mo.  487;  Dean  v. 


240  MUNICIPAL    COKPOKATIONS.  [§§  178,  179. 

interfere  with  the  exercise  of  municipal  powers  upon 
the  ground  that  the  act  done  is  unwise  or  op})ressive; 
to  sustain  such  interference  it  must  appear  either  that  the 
act  was  ultra  vires,  fraudulent  or  corrupt.^  So  where 
the  city  has  power  to  contract  for  a  water  supply,  the 
price,  kind  of  water,  and  amount,  are  matters  of  legisla- 
tive discretion  vested  in  the  city  council;  and  when  the 
city  confines  herself  within  the  limits  of  her  power  to 
contract,  its  legal  discretion  exercised  by  the  council  will 
not  be  inquired  into  by  the  courts,  in  the  absence  of  fraud 
and  corrupt  and  extravagant  legislation,  which  are  be- 
yond the  objects  and  purposes  of  municipal  government.^ 

§  178.  Courts  may  restrain  passage  of  ultra  vires  ordi- 
nances. —  The  courts  have  jurisdiction  to  grant  an  injunc- 
tion to  restrain  the  passage  of  a  municipal  ordinance 
when  the  same  would  be  beyond  the  power  of  the  munic- 
ipal officers  and  where  the  passage  of  snch  ordinance 
would  work  an  irreparable  injury.'  Equity  cannot,  how- 
ever, stand  between  the  public  and  their  regularly  elected 
authorities,  unless  the  latter  exceed  their  power,  and,  so 
long  as  they  do  not,  the  people  must  bear  the  conse- 
quences of  their  folly  or  choose  wiser  representatives. 

§  179.  Power  of  municiiKditij  as  to  taxation. —  "While 
the  general  proposition  that  the  exclusive  power  of  taxa- 
tion belongs  to  the  legislative  branch  of  government  can- 

Todd,  22  Mo.  90;  Schanck  v.  Mayor,  69  N.  Y.  444;  Wiggins  v.  New- 
York,  9  Paige,  16;  Kelly  v.  Milwaukee,  18  Wis.  83. 

1  Wells  V.  Atlanta,  43  Ga.  67. 

2  Conery  v.  New  Orleans  Water  Works,  39  La.  Ann.  770. 

3  Poyer  v.  Des  Plaines,  20  111.  App.  30;  Moore  v.  Hoffman,  2  Cin. 
(Ohio),  453;  Whitney  v.  Mayor,  28  Barb.  (N.  Y.)  232;  Baltimore  v. 
Eadecke,  49  Md.  217;  Gartside  v.  East  St.  Louis,  43  111.  47;  West  v. 
Mayor,  10  Paige  (N.  Y.),  539;  Banking  Co.  v.  Jersey  City,  13  N.  J.  Eq. 
258. 


■§  ISO.]  MUNICIPAL   CORPOEATIOXS.  2il 

not  be  denied,  yet  under  our  system  of  government  such 
power  may  be  delegated  to  municipal  corporations,  which 
are  merely  the  instrumentalities  of  the  state  for  the  bet- 
ter administration  of  the  government  in  matters  of  local 
concern.  Where  such  a  corporation  is  created,  the  power 
of  taxation  is  vested  in  it  as  an  essential  attribute  for  all 
the  purposes  of  its  existence,  unless  its  exercise  be  in  ex- 
press terms  prohibited.^ 

§  180.  Power  to  tax  may  T)e  revoTied. —  The  power  of 
taxation  on  the  part  of  a  municipal  corporation  is  not 
private  property  or  a  vested  right  of  property  in  its  hands ; 
but  the  conferring  of  such  power  is  an  exercise  by  the 
legislature  of  a  public  and  governmental  power  which 
cannot  be  imparted  in  perpetuity,  and  is  always  subject 
to  revocation,  modification  and  control.^ 

1  United  States  v.  New  Orleans, 98  U.S.  393,  393;  Loan  Ass'n  v.  To- 
peka,  20  Wall.  (U.  S.)  660;  Coram,  v.  Commissioners,  etc.,  37  Pa.  St. 
277;  Lowell  v.  Boston,  111  Mass.  460. 

In  United  States  v.  New  Orleans,  supra,  the  court,  by  Mr.  Justice 
Field,  says:  "For  the  accomplishment  of  those  purposes,  its  au- 
thorities, however  limited  the  corporation,  must  have  the  power  to 
raise  money  and  control  its  expenditure.  In  a  city  even  of  small 
extent  they  have  to  provide  for  the  preservation  of  peace,  good  order 
and  health,  and  the  execution  of  such  measures  as  conduce  to  the 
general  good  of  its  citizens;  such  as  the  opening  and  repairing  of 
streets,  the  construction  of  sidewalks,  sewers  and  drains,  the  in- 
troduction of  water,  and  the  establishment  of  a  fire  and  police  de- 
partment. All  of  them  require  for  their  execution  considerable 
expenditures  of  money.  Their  authorization  without  providing  the 
means  for  such  expenditures  would  be  an  idle  and  futile  proceeding. 
Their  authorization,  therefore,  implies  and  carries  with  it  the  power 
to  adopt  the  ordinary  means  employed  by  such  bodies  to  raise  funds 
for  their  execution,  unless  such  funds  are  otherwise  provided.  And 
the  ordinary  means  in  such  cases  is  taxation." 

2  Williamson  v.  New  Jersey,  130  U.  S.  190,  and  cases  cited;  New 
Orleans  v.  Water  Works,  142  U.  S.  79. 

16 


242  MUNICIPAL   COKPOKATIONS.  [§  181. 

§  181.  Power  can  le  exercised  only  for  jyiibliG  purposes. 
It  is  well  settled  by  the  courts  of  this  country  that  no 
taxation  is  valid  unless  imposed  for  public  purposes;  and 
municipalities  cannot,  therefore,  impose  taxation  for  other 
than  such  purposes,  nor  can  the  legislature  sanction  the 
imposition  of  taxation  which  is  intended  for  private  ends.^ 
Accordingly  a  municipality  has  no  power  to  levy  a  tax 
the  purpose  of  which  is  to  assist  or  encourage  private  or 
corporate  enterprises  for  manufacturing  or  mining.^  As 
the  court  say  in  Lowell  v.  Boston,  supra:  "  The  power  to 
levy  taxes  is  founded  on  the  right,  duty  and  responsibility 
to  maintain  and  administer  all  the  governmental  func- 
tions of  the  state,  and  to  provide  for  the  public  welfare. 
To  justify  any  exercise  of  the  power  requires  that  the 
expenditures  which  it  is  intended  to  meet  shall  be  for 
some  public  service,  or  some  object  which  concerns  the 
public  welfare.  The  promotion  of  the  interests  of  indi- 
viduals, either  in  respect  of  property  or  business,  although 
it  may  result  incidentally  in  the  advancement  of  the  pub- 
lic welfare,  is,  in  its  essential  character,  a  private  and  not 
a  public  object.     However  certain  and  great  the  result- 

iDill.  Mun.  Corp.,  §736;  Hanson  v.  Vernon,  27  Iowa,  28;  People 
V.  McCreery,  34  Cal."  432;  Doyle  v.  Austin,  47  Cal.  360;  Weismer  v. 
Douglas,  64  N.  Y.  91;  Hilbish  v.  Catherman,  64  Pa.  St.  154;  Glasgow 
V.  Rouse,  43  Mo.  489;  Warren  v.  Henley,  31  Iowa,  31;  Stockton,  etc. 
Ry.  Co.  V.  City  Council,  41  Cal.  149;  Opinion  of  Judges,  58  Me.  591; 
Allen  V.  Joy,  60  Me.  124;  Feldraan  v.  Charleston.  23  S.  C.  57;  Sharp- 
less  V.  Philadelphia,  21  Pa.  St.  147;  Citizens'  Sav.  etc.  v.  Topeka,  20 
Wall.  6r)5;  Parkersburg  v.  Brown,  106  U.  S.  487;  Cole  v.  La  Grange, 
113  U.  S.  1;  Lowell  v.  Boston,  111  Mass.  454;  Brewer  Brick  Co.  v. 
Brewer,  62  Me.  62;  State  v,  Clark,  29  Wis.  664;  In  re  Eureka  Basin 
Co.,  96  N.  Y.  42;  English  v.  People,  96  111.  566. 

2  Loan  Ass'n  v.  Topeka,  20  Wall.  (U.  S.)  655;  Weismer  v.  Douglas, 
64  N.  Y.  91;  People  v.  Parks,  58  Cal.  624;  Bissell  v.  Kankakee,  64  111. 
249;  McConnell  v.  Hamm,  16  Kan.  228;  Tyler  v.  Beacher,  44  Vt.  648; 
Allen  V.  Joy,  60  Me.  124;  Commercial  Bank  v.  lola,  2  Dili  (C.  C.)  853. 


§  182.]  MUNICIPAL   CORPORATIONS.  245 

ing  good  to  the  general  public,  it  does  not,  by  reason  of 
its  comparative  importance,  cease  to  be  incidental.  The 
incidental  advantage  to  the  public,  or  to  the  state,  vrhich 
results  from  the  promotion  of  private  interests,  and  the 
prosperity  of  private  enterprises  or  business,  does  not  jus- 
tify their  aid  by  the  use  of  public  money  raised  by  taxa- 
tion, or  for  which  taxation  may  become  necessary.  It  is 
the  essential  character  of  the  direct  object  of  the  expendi- 
ture which  must  determine  its  validity,  as  justif^nng  a 
tax,  and  not  the  magnitude  of  the  interests  to  be  affected 
nor  the  degree  to  which  the  general  advantage  of  th© 
community,  and  thus  the  public  welfare,  may  be  ulti- 
mately benefited  by  their  promotion."  So  taxes  cannot 
be  imposed  to  aid  persons  suffering  from  a  great  fire  or 
flood,  either  by  providing  them  with  money,  food,  seed, 
or  otherwise.^  Nor  to  pay  the  selectmen  the  costs  and 
damages  sustained  by  them  in  resisting  criminal  proceed- 
ings at  the  instance  of  the  town.'^ 

§  182,  Taxation  and  power  to  license  distinguished. — 
The  distinction  between  the  power  to  license  as  a  police 
regulation  and  the  same  power  as  a  revenue  measure  is 
of  the  utmost  importance.  If  granted  with  a  view  to 
revenue,  the  amount  of  tax,  if  not  limited  by  the  chapter, 
is  in  the  discretion  and  judgment  of  the  municipal  author- 
ities ;  if  given  as  a  police  power,  it  must  be  exercised  as 
a  means  of  regulation  only  and  cannot  be  used  as  a 
source  of  revenue.*  So  a  provision  in  its  charter  granting 
power  to  "  license  and  regulate  "  does  not  authorize  the 

1  Lowell  V.  Boston,  111  Mass.  460. 

2  Lowell  V.  Boston,  supra. 

3  North  Hudson  Co.  v.  Hoboken,  41  N.  J.  L.  71;  State  v.  Hoboken, 
4  Vroom  (N.  J.),  280;  Mayor  v.  Second  Ave.  R.  Co.,  32  N.  Y.  251-^ 
Coram.  V.  Markhani,  7  Bush  (Ky.),  486;  State  v.  Cassidy,  22  Minn. 
312. 


244  MUNICIPAL   COKPOKATIONS.  [§§  183,  184. 

city  to  exact  license  fees  for  revenue  purposes.^  A  power 
to  license  is  a  police  power.  The  exaction  of  license  fees 
for  revenue  purposes  is  the  exercise  of  the  power  of  tax- 
ation. 

§  183.  Poiver  to  exercise  right  of  eminent  domain. —  The 
right  of  eminent  domain,  that  is  to  say,  the  right  to  take 
private  property  for  public  uses,  may  be  exercised  by  mu- 
nicipal corporations  under  delegated  legislative  authority 
in  the  execution  of  works  in  which  the  public  is  interested.^ 
This  is  a  right  which  appertains  to  and  is  inherent  in 
every  independent  government,  and  one  that  is  without 
any  legal  limitations  except  such  as  may  exist  in  the  or- 
ganic restraints  upon  legal  action.  It  requires  no  consti- 
tutional recognition;  it  is  an  attribute  of  sovereignty. 
When  the  use  is  public,  the  necessity  or  expediency  of  ap- 
propriating any  particular  property  is  not  subject  to  judi- 
cial interference.' 

§  184.  Distinction  between  eminent  domain  and  taxa- 
tion.—  The  distinction  between  the  right  of  eminent  do- 
main and  that  of  taxation  is  very  clearly  explained  by 
Mr.  Justice  Ruggles  in  People  v.  The  Mayor,  etc.,  4  IS".  Y. 
421.^   The  learned  justice  says :  "  Private  property  may  be 

1  North  Hudson  Co.  v.  Hoboken,  supra;  Cooley,  Const.  Lim.  201; 
Dill.  Mun.  Corp.,  §  357. 

2  Boom  Co.  V.  Paterson,  98  U.  S.  406;  Dill.  Mun.  Corp.,  §  584  et  seq.; 
Cavanagh  v.  Boston,  139  Mass.  426;  People  v.  Smith,  21  N.  Y.  595; 
Hyde  Park  v.  Oakwoods  Cemetery,  119  111.  141;  West  River,  etc.  Co. 
V.  Dix,  6  How.  (U.  S.)  507;  Mercer  v.  Pittsburg,  etc.  Co.,  36  Pa.  St. 
99;  Scudder  v.  Trenton,  etc.  Co.,  1  Saxt.  (N.  J.)  694;  Harbeck  v.  To- 
ledo, 11  Ohio  St.  219:  Shaffner  v.  St.  Louis,  31  Mo.  264;  Cemetery 
Ass'n  V.  New  Haven,  43  Conn.  234.  And  see  cases  cited  in  §  604,  Dill, 
Mun.  Corp. 

3  Boom  Co.  V.  Paterson,  sujira. 

*  And  see  Dill.  Mun.  Corp.,  §  738,  and  cases  cited. 


§  185.]  MUNICIPAL  CORPORATIONS.  245 

constitutionally  taken  for  public  use  in  two  modes;  that 
is  to  say,  by  taxation  and  by  eminent  domain.  These  are 
rights  which  the  people  collectively  retain  over  the  prop- 
erty of  individuals  to  resume  such  portions  of  it  as  may 
be  necessary  for  public  use.  The  right  of  taxation  and 
the  right  of  eminent  domain  rest  substantially  on  the 
same  foundation.  Compensation  is  made  when  private 
property  is  taken  in  either  way.  Money  is  property.  Tax- 
ation takes  it  for  public  use ;  and  the  tax-payer  receives 
or  is  supposed  to  receive  his  just  compensation  in  the  pro- 
tection which  government  affords  to  his  life,  liberty  and 
property,  and  in  the  increase  of  the  value  of  his  posses- 
sions by  the  use  to  which  the  government  applies  the 
money  raised  by  the  taxes.  When  private  property  is 
taken  by  right  of  eminent  domain,  special  compensation 
is  made,  for  the  reasons  hereinafter  stated.  .  .  .  Taxa- 
tion exacts  money  or  services  from  individuals  as  and  for 
their  respective  shares  of  contribution  to  the  public  bur- 
thens. Private  property  is  taken  for  public  use  by  right 
of  eminent  domain,  not  as  the  owner's  share  of  contribu- 
tion to  the  public  burthen,  but  in  so  much  beyond  his. 
share.  Special  compensation  is  therefore  to  be  made  in 
the  latter  case  because  the  government  is  a  debtor  for 
the  property  so  taken ;  but  not  in  the  former,  because  the 
payment  of  taxes  is  a  duty  and  creates  no  obligation  to 
repay  otherwise  than  in  the  proper  application  of  the 
taxes.  Taxation  operates  upon  a  community  or  upon  a 
class  of  persons  in  a  community,  and  by  some  rule  of  ap- 
portionment. The  exercise  of  the  right  of  eminent  do- 
main operates  upon  an  individual,  and  without  reference 
to  the  amount  or  value  exacted  from  any  other  individual 
or  class  of  individuals." 

§185.  Poivers  as  to  property. —  A  municipal  corpora- 
tion may,  unless   restrained    by  statute,  purchase   and 


24:6  MUNICIPAL   COKPOKATIONS.  [§  185. 

hold  all  such  real  property  as  ma}^  be  necessary  to  the 
proper  exercise  of  any  power  specifically  conferred,  or 
essential  to  those  purposes  of  municipal  government  for 
which  it  was  created.^  So  when  a  municipal  corporation 
has  poAver  to  purchase  "  any  property "  in  connection 
with  a  given  object,  it  may  purchase  both  real  and  per- 
sonal property  necessary  to  the  object  specified.  The 
omission  of  the  word  "  real "  does  not  limit  the  power  so 
as  to  exclude  the  purchase  of  real  property  from  its  exer- 
cise.2  And  it  has  been  held  that  where  a  city  council  has 
power  to  "  purchase  a  site  for  a  city  hall  and  lockup,"  the 
power  was  not  exhausted  by  a  single  purchase;  but  that 
it  appearing  afterwards  that  a  larger  lot  was  necessary, 
it  might  be  purchased,  and  the  one  first  purchased  turned 
in  in  part  payment.'  But  a  municipal  corporation  has  no 
authority  to  purchase  lands  and  erect  buildings  for  any 
but  municipal  purposes.*  So  a  charter  authorizing  a  city 
to  buy  real  estate  and  personal  property  "for  the  use, 
convenience  and  improvement  of  the  city  "  does  not  au- 
thorize it  to  purchase  land  within  the  city  limits  for  the 
benefit  of  an  agricultural  and  mechanical  association,  and 
to  give  such  association  the  "  exclusive  use  of  the  prem- 
ises "  for  holding  its  "  annual  fairs."  ^ 

iDill.  Mun.  Corp.,  §  562;  Ketchum  v.  Buffalo,  4  Kernan  (N.  Y.), 
356;  Le  Couteulx  v.  Buffalo,  33  N.  Y.  333;  Paterson  v.  Mayor,  17 
N.  Y.  449;  Perin  v.  Carey,  24  How.  (U.  S.)  465;  State  v.  Madison,  7 
Wis.  688;  State  v.  Commissioner,  etc.,  23  N.  J.  L.  510;  State  v.  Brown, 
27  N.  J.  L.  13;  Louisville  v.  Commissioners,  1  Duvall  (Ky.),  295;  Louis- 
ville V.  University,  15  B.  Mon.  (Ky.)  642;  Greeley  v.  People,  60  111.  19; 
People  v.  Harris,  4  Cal.  9;  Konrad  v.  Rogers,  70  Wis.  492. 

2De  Witt  V.  San  Francisco,  2  Cal.  289. 

3  Konrad  v.  Rogers,  70  Wis.  492. 

<  Sherlock  v.  Winnetka,  59  111.  389,  68  la  581;  Jackson  v.  Hart- 
well,  8  Johns.  (N.  Y.)  422. 

5  Eufaula  v.  McNab,  67  Ala.  588. 


§  186.]  MUNICIPAL   COKPOKATIONS.  247 

§  186.  Powers  concerning  divided  municipalities.—  Old 
municipalities  may  be  divided  under  legislative  regula- 
tion, and  new  ones  incorporated  out  of  such  parts  of  the 
territory  of  those  previously  organized ;  and  in  enacting 
such  regulations  the  legislature  may  apportion  the  com- 
mon property  and  the  common  burdens,  and  may,  as  be- 
tween the  parties  in  interest,  settle  all  the  terms  and 
conditions  of  the  division  of  their  territory,  or  the  alter- 
ations of  their  boundaries,  as  fixed  by  any  prior  law.^  The 
powers  exercised  in  the  division  of  public  corporations 
being  purely  legislative,  the  power  to  prescribe  the  rule 
by  which  the  property  of  the  corporation  shall  be  divided 
and  the  debts  apportioned,  being  incidental  to  the  power 
to  divide  the  territory,  must  also  be  strictly  legislative ; 
and  the  courts  have  no  authority  over  the  subject,  and 
can  only  construe  the  act  of  the  legislature  and  see  that 
the  legislative  will  is  carried  into  effect.^  But  where  no 
regulation  is  made  by  the  legislature  for  any  apportion- 
ment of  the  property,  in  case  of  division  the  old  corpora- 
tion owns  all  the  public  property  within  her  limits,  and 
is  responsible  for  all  the  debts  of  the  corporation  con- 
tracted before  the  act  of  separation  was  passed.'  And 
where  the  charter  of  one  corporation  is  vacated  and  ren- 
dered null,  the  whole  of  its  territory  being  annexed  to 
two  others,  if  no  legislative  arrangements  are  made,  the 
€£fect  of  the  annulment  and  annexation  will  be  that  the 
two  enlarged  corporations  will  be  entitled  to  all  the  pub- 

1  Mount  Pleasant  v.  Beckwith,  100  U.  S.  514. 

2  Barker  Dist.  v.  Valley  Dist.,  20  Am.  &  Eng.  Corp.  Cas.  (W.  Va.)  11; 
Bristol  V.  Newchester,  3  N.  H.  524;  Overseers  v.  Overseers,  18  Johns. 
(N.  Y.)  382;  St.  Louis  v.  Russell,  9  Mo.  507. 

3  Dill.  Mun.  Corp.,  §  189;  Mt.  Pleasant  v.  Beckwith,  100  U.  S.  514; 
Laramie  Co.  v.  Albany  Co.,  92  U.  S.  307;  North  Yarmouth  v.  Skill- 
ngs,  45  Me.  141;  Greenville  v.  Mason,  53  N.  H.  515;  People  v.  Trust- 
ees, etc.,  86  111.  613;  Town  of  Depere  v.  Bellevue,  31  Wis.  120. 


248  MUNICIPAL   CORrORATIONS.  [§  187, 

lie  property  and  immunities  of  the  one  that  ceases  to  exist, 
and  they  will  become  liable  for  all  the  legal  debts  con- 
tracted prior  to  the  time  when  the  annexation  was  carried 
into  operation.* 

§187.  Poivers  of  extinguished  municipalities. —  Extin- 
guished municipalities  neither  own  property  nor  have 
they  any  power  to  levy  taxes  to  pay  debts.  "Whatever 
power  such  municipality  may  have  had  to  levy  taxes 
when  the  act  passed  annulling  her  charter  terminated, 
and  from  the  moment  the  annexation  of  her  territory  was 
made  to  the  new  town,  such  power  of  taxation  became 
vested  in  the  proper  authorities  of  the  town  to  which  the 
territory  and  jurisdiction  were  by  that  act  transferred.^ 

1  Thompson  v.  Abbott,  61  Mo.  176. 

2Mt.  Pleasant  v.  Beckwith,  100  U.  S.  514;  North  Hempsted  v. 
Hempsted,  2  Wend.  (N.  Y.)  109;  Hartford  Bridge  Co.  v.  East  Hart- 
ford, 16  Conn.  149. 


CHAPTEE  XIY. 

GENERAL  POWERS  AS  TO  CONTRACTS. 

§  188.  Introductory  —  General  rule  as  to  contracts. 

189.  The  mode  prescribed  must  be  strictly  pursued. 

190.  Ultra  vires  contracts  by  oflScers. 

191.  Implied  municipal  contracts. 

192.  When  estoppel  not  applicable. 

193.  When  estopped  to  deny  irregularity. 
194  Ratification  of  ultra  vires  contracts. 

195.  Contracts  of  compromise  and  arbitration. 

196.  Limitation  on  contracting  indebtedness. 

197.  Instances  where  increase  denied. 

198.  Equity  will  enjoin  illegal  increase  of  debt. 

§  188,  Introductory  —  General  rule  as  to  contracts. — 
A  municipal  corporation,  unless  in  some  way  restrained 
by  charter,  has  the  same  general  powers  with  other  cor- 
porations to  make  contracts  in  furtherance  of  the  corpo- 
rate objects.^    It  is  elementary  that  under  the  law  govern- 

1  Boone,  Corp.,  §  289;  Douglas  v.  Virginia  City,  5  Nev.  147;  Good- 
rich V,  Detroit,  12  Mich.  279;  Albright  v.  Town  Council,  9  Rich.  399; 
Williamsport  v.  Comm.,  84  Pa.  St.  487;  Bateman  v.  Mayor,  etc.,  3 
Hurl.  &  N.  322;  East  St.  Louis  v.  Gas  Light  Co.,  98  111.  432. 

In  East  St.  Louis  v.  Gas  Light  Co.,  supra,  Mr.  Justice  Walker 
says: 

"  The  long  and  well-established  doctrine  of  the  law  is  that  all 
acts  performed  without  authority  are  void.  This  applies  as  well  to 
corporate  bodies  as  to  natural  persons.  The  most  simple  and  ele- 
mentary rules  hold  that  corporate  bodies  derive  all  their  powers 
from  their  creator,  whether  they  be  granted  by  the  legislature  or 
(as  in  England)  by  the  executive  department  of  government.  They 
are  by  their  charters  endowed  with  all  their  franchises  and  facul- 
ties, and  any  attempt  to  exercise  others  is  usurpation  that  the  law 


250  M:uNICIP^^x  conteacts.  [§  188. 

ing  tlie  acts  of  municipal  corporations  tliey  may  adopt 
all  the  ordinary  means  which  may  be  necessary  to  the 
execution  of  the  powers  expressly  given  in  their  charters 

can  never  sanction.  Natural  persons  are  born  with  faculties,  rights 
and  powers,  but  corporate  bodies  possess  none  but  such  as  are  con- 
ferred by  law,  in  express  terms,  or  by  clear  and  unmistakable  impli- 
cation. These  rules  are  so  elementary  that  it  is  almost  inexcusable 
to  refer  to  them. 

"If,  then,  this  is  true,  how  can  it  be  said  that  a  municipal  or  pri- 
vate corporation  can  enter  into  a  valid  contract  which  is  prohibited 
by  law,  or  one  that  is  not  in  conformity  with  the  requirements  of 
the  law,  or  where  no  authority  is  possessed  to  so  contract?  It 
would  seem  to  be  so  clear  that  such  a  contract  would  be  utterly 
void  as  to  require  no  discussion  to  establish  its  truth.  It  must  fol- 
low that  if  a  contract  by  a  corporate  body  is  void  for  want  of  power 
to  make  it,  such  a  body  is  equally  powerless  to  ratify  it,  or  to  per- 
form acts  that  would  estop  it  from  asserting  its  invalidity.  There 
must  be  the  same  quantum  of  power  to  ratify  a  void  as  is  required 
to  enter  into  a  binding  contract.  The  stream  can  never  rise  higher 
than  its  source,  and  a  contract  void  for  want  of  power  cannot  be 
ratified  or  the  body  estopped  where  the  power  is  only  the  same  and 
no  greater  than  when  it  was  first  executed.  This  would  seem  to  be 
axiomatic;  but  I  am  fully  aware  that  some  courts  of  respectability 
have  announced  an  opposite  rule,  and  some  text-writers  have  fol- 
lowed such  decisions.  But  I  can  never  indorse  the  doctrine,  and 
dissent  to  it  in  its  entire  length  and  breadth. 

"Who  ever  heard  of  its  being  claimed  that,  under  the  operation 
of  the  common  law,  a  contract  of  a  married  woman,  or  a  person  noa 
compos  mentis,  could  be  ratified,  or  they  could  be  estopped  during 
the  continuance  of  the  disability?  So  of  the  contract  of  a  minor, 
which  may  be  only  voidable.  I  presume  it  was  never  urged  that 
such  a  contract  would  be  rendered  valid  by  a  further  contract,  or 
the  infant  be  estopped  by  his  acts  before  arriving  at  his  majority. 
And  this  is  so  because  of  the  want  of  power  to  bind  himself  at  the 
time  of  making  the  contract,  and  therefore  a  subsequent  agreement, 
or  the  performance  of  acts  that  otherwise  would  operate  as  an 
estoppel,  cannot  produce  such  results.  And  the  same  must  be  true, 
to  its  full  extent,  of  corporate  bodies  acting  without  power.  No 
well-founded  reason  or  distinction  can  be  taken.  A  rule  that  a 
party  under  disability,  entering  into  a  contract,  may,  during  such 
disability,  ratify  it,  or  may  so  act  as  to  become  estopped,  is  not  sane- 


§  188.]  MUNICIPAL  CONTKACTS.  251 

or  those  which  are  incidental  thereto.^  The  power  to 
make  contracts  is  usually  conferred  in  general  terms  in 
the  incorporating  act.  Bat  where  the  power  is  conferred 
in  this  manner,  it  is  not  to  be  construed  as  authorizing 

tioned  by  any  rule,  and  is  opposed  to  every  well-founded  legal  prin- 
ciple; nor  can  any  rule  or  pi'inciple  be  found  that  can  sanction  it  as 
an  exception. 

"But  if  such  an  exception  could  be  maintained  against  private 
corporations,  what  possible  reason  can  be  assigned  for  applying  it 
to  a  public  corporation?  They  are  dissimilar  in  the  purpose  of  their 
creation  and  in  the  powers  with  which  they  are  endowed.  The  one 
class  is  created  for  business  purposes,  and  the  other  as  aids  to  the 
government  in  conducting  public  affairs.  The  one  is  endowed  with 
a  portion  of  the  powers  of  natural  persons,  and  the  other  with  a 
portion  of  governmental  functions.  In  this  consists  a  broad  ditfer- 
ence  between  the  two.  If  deemed  necessary  to  make  the  exception 
against  private  corporations  to  enforce  void  contracts  made  in  the 
course  of  their  business,  it  does  not.  by  any  means,  follow  that  the 
same  exception  should  be  applied  to  public  corporate  bodies.  To 
sanction  such  an  exception  is  to  abolish  all  distinction  between 
rightful  exercise  of  power  and  action  without  power  by  such  bod- 
ies, and  if  carried  to  its  logical  conclusion  must  destroy  legislative 
power  to  limit  and  restrict  these  bodies  by  their  charters.  It  would 
be  to  enable  persons  to  procure  a  charter  with  specified  franchises 
and  powers,  and  to  exercise  all  other  enumerated  fi'anchises  and 
corporate  powers.  Whilst  it  is  desirable  that  contracts  entered  into 
by  such  bodies  shall  be  protected  and  enforced,  it  is  not  desirable 
that  all  or  any  of  the  well-defined  principles  of  the  law  should  be 
overturned  to  accomplish  the  jjurpose. 

"It  may  be  that  the  general  assembly  has  authority  to  empower 
a  corporation  to  ratify  a  contract  made  by  it  without  power,  or  to 
declare  that  certain  acts  performed  by  it  shall  operate  as  an  estop- 
pel to  assert  the  want  of  power;  but  no  proposition  can  be  plainer 
than  that  the  courts  have  no  such  power,  and  to  exercise  it  is  to  in- 
fringe upon  the  powers  and  functions  of  the  legislative  department 
of  government.  If  maintained,  it  will  operate  as  judicial  enact- 
ments that  find  no  sanction  in  the  fundamental  law  conferring  judi- 
cial powers.     The  functions  of  the  different  departments  must  be 

iSee  §  170,  anfe. 


252  MUNICIPAL   CONTRACTS.  [§  189. 

the  making  of  contracts  of  all  descriptions,  but  only  such 
as  are  necessary  and  usual  to  enable  the  corporation  to 
secure  or  to  carry  into  effect  the  purposes  for  which  it 
was  created.^ 

§  189.  The  mode  'prescribed  must  le  strictly  pursued. — 
Where  the  mode  of  procedure  in  respect  to  contracts  of 
municipal  corporations  is  prescribed  by  law,  such  mode 

kept  distinctly  separate  and  well  defined  to  avoid  confusion  and  to 
carry  out  the  purposes  of  the  founders  of  our  system  of  government 

"  I,  however,  do  not  understand  the  main  opinion  to  sanction  or 
indorse  this  doctrine,  but  it  refers  to  cases  and  text-books  that  do  as- 
sert it,  and  I  feel  constrained  to  avoid  even  the  semblance  of  it& 
indorsement,  as  I  regard  the  question  of  more  than  ordinary  impor- 
tance. The  past  generation  has  been  prolific  in  creating  these  arti- 
ficial bodies,  and  their  number  and  extent  are  vast,  and  thus  this 
(juestion  assumes  importance. 

"The  courts  have  held  that  private  or  business  corporations  are 
artificial  persons,  endowed  with  rights  that  are  entitled  to  the  same 
protection  as  those  of  natural  persons,  and  if  natural  persons  under 
disabilities  cannot  bind  or  estop  themselves,  it  may  be  asked  why 
corporate  bodies  under  like  disabilities  should  not  receive  like  pro- 
tection? This  is  not  a  question  of  policy,  but  of  right.  But  if  it 
were,  it  is  not  for  the  courts,  but  the  legislature,  to  inaugurate  the 
policy." 

iKetchum  v.  Buffalo,  14  N.  Y.  356;  Douglas  v.  Virginia  City,  5 
Nev.  148;  Indianapolis  v.  Ind.  etc.  Co.,  66  Ind.  396;  Goodrich  v.  De- 
troit, 12  Mich.  279;  Chaffee  v.  Granger,  6  Mich.  51;  Rae  v.  Mayor, 
etc.,  51  Mich.  526;  Bank  of  Columbia  v.  Patterson,  7  Cranch  (U.  8.)^ 
299;  Montgomeiy  County  v.  Barber,  45  Ala.  245;  Siebrecht  v.  New 
Orleans,  12  La.  Ann.  412;  Albright  v.  Town  Council,  9  Rich.  L.  (S.  C.) 
399;  Bateman  v.  Mayor,  etc.,  3  H.  &  N.  322;  Williamsport  v.  Comm., 
84  Pa.  St.  487;  Wells  v.  Atlanta,  43  Ga.  67;  Rome  v.  Cabot,  28  Ga.  50; 
Lawrence  v.  Killam,  11  Kan.  512;  Wyandotte  v.  Zeitz,  21  Kan.  649; 
Jones  V.  Richmond,  18  Grat.  (Va.)  517;  Miller  v.  Milwaukee,  14  Wis.  642;. 
Brenham  v.  Water  Co.,  67  Tex,  542;  Sturtevant  v.  Alton,  3  McLean 
(U.  S.),  393;  Robinson  v.  St.  Louis,  28  Mo.  488;  Royalton  v.  Royalton, 
etc.  Co.,  14  Vt.  311;  Gregory  v.  Bridgeport,  41  Conn.  76;  State  v. 
Hammonton,  38  N.  J.  L.  430;  Argenti  v.  San  Francisco,  16  CaL  255; 
Dill.  Mun.  Corp.,  g  443. 


§  189.]  MUNICIPAL   CONTKACTS.  253 

must  be  strictly  pursued  by  the  corporation  in  relation 
to  the  awarding  and  making  of  contracts  or  their  subse- 
quent ratification.  If  it  is  not  done  the  contract  will  be 
void,^  And  this  is  so  although  the  contract  entered  into 
relates  to  a  subject-matter  with  respect  to  which  the  cor- 
porate authorities  have  capacity  to  contract.  If  the  pro- 
visions of  the  charter  as  to  the  mode  of  entering  upon 
such  contracts  be  violated,  the  contract  is  void.^  Illustra- 
tions of  this  doctrine  are  to  be  found  in  those  cases  in 
which  it  is  required  of  the  corporate  body  to  put  out  the 
public  work  to  the  lowest  bidder;  for,  as  such  a  requisi- 
tion is  a  circumscription  of  the  power  of  the  corporation, 
it  has  invariably  been  held  that  any  other  method  of 
contracting  is  illegal,  and  consequently  cannot  be  subse- 
quently validated  by  a  ratification.^  Accordingly,  where 
it  is  provided  by  statute  that  city  contracts  for  work  or 
material  shall  be  given  to  the  "lowest  responsible  bidder, 
under  such  regulations  as  shall  be  prescribed  by  ordi- 
nance," it  is  essential  that  an  ordinance  providing  for  the 
awarding  of  a  contract  should  designate  certain  plans 
and  specifications  on  which  to  bid,  as  otherwise  there  can 
be  no  competitive  bidding.*  So  a  contract  let  under  an 
ordinance  directing  the  paving  of  a  street,  without  speci- 

iTown  of  Durango  v.  Pennington,  8  Colo.  257;  McBride  v.  Grand 
Rapids,  56  Mich.  95;  Niles  Water  Works  v.  Niles,  59  Mich.  311;  Kee- 
ney  v.  Jersey  City,  47  N.  J.  L.  449. 

2  Gregory  v.  Jersey  City,  34  N.  J.  L.  397;  Brady  v.  City  of  New- 
York,  20  N.  Y.  312;  Christopher  v.  Same,  13  Barb.  (N.  Y.)  557;  Cowan 
V.  West  Troy,  43  Barb.  (N.  Y.)  48. 

3  Cory  V.  County  of  Somerset,  45  N.  J.  L.  445,  and  cases  cited. 
*Mazet  V.  Pittsburg,  137  Pa.  St.  548;  Wilkins  v.  Detroit,  46  Mich. 

120;  Detroit  v.  Hosmer,  79  Mich.  384;  People  v.  Commissioners,  4 
Neb.  150;  Wells  v.  Burnham,  20  Wis.  112;  Kneeland  v.  Milwaukee, 
18  Wis.  411;  Barber  Asphalt  Pa  v.  Co.  v.  Hunt,  100  Mo.  22;  Same  v. 
Gogreve,  41  La.  Ann.  251;  Ely  v.  Grand  Rapids,  84  Mich.  336;  Cough- 
lin  V.  Gleason,  121  N.  Y.  631. 


254:  MUNICIPAL   OONTKACTS.  [§  190. 

fying  the  kind  of  paving  to  be  done,  is  illegal  and  void 
when  no  specifications  for  the  kind  of  pavement  con- 
tracted for  were  prepared,  and  the  advertisement  invit- 
ing bids  referred  bidders  to  specifications  on  file  in  a  cer- 
tain office,  all  of  which  related  to  other  kinds  of  paving.' 
And  again,  where  by  statute  the  making  and  filing  of 
plans  and  specifications  of  the  work  to  be  done  are  con- 
ditions precedent  to  the  power  of  the  commissioners  to 
advertise  for  proposals  and  award  contracts  for  such  work,, 
the  due  filing  of  full  specifications  of  the  work  will  not 
render  such  contracts  valid,  if  the  plans  have  not  been 
made  and  filed  as  required  by  statute.^  So  where  a  mu- 
nicipal charter  provides  that  contracts  for  work  shall  be 
let  to  the  lowest  responsible  bidder,  the  officials  author- 
ized to  let  a  contract  may  not  arbitrarily  reject  the  lowest 
bid  and  accept  a  higher,  without  any  facts  justifying  it.* 

§  190.  Ultra  vires  contracts  hij  officers. — The  officers, 
agents,  or  even  city  council,  of  a  municipal  corporation 
cannot  bind  it  by  any  act  or  contract  which  transcends 
their  lawful  or  legitimate  power ;  and  the  municipal  cor- 
poration may  set  up  the  plea  of  tdtra  vires  or  its  own 
want  of  pow^er  under  its  charter,  or  statute  under  which 
it  was  organized,  to  enter  into  a  given  contract,  or  to  do 
a  given  act  in  excess  of  its  corporate  power  and  author- 
ity.*   A  person  contracting  with  public  officers  must  take 

1  Mazet  V.  Pittsburg,  supra. 

2Kueeland  v.  Milwaukee,  20  Wis.  437;  Walls  v.  Burnham,  20  Wis. 
112. 

sCoughlin  v.  Gleason,  121  N.  Y.  631;  Bigler  v.  Mayor,  etc.,  5  Abb. 
N.  Cas.  (N.  Y.)  51. 

*  Dill.  Mun.  Corp.,  §  457;  Mayor,  etc.  v.  Cunlifife,  2  Comst.  (N.  Y.) 
175;  Marsh  v.  Fulton  County,  10  Wall.  (U.  S.)  676;  Thomas  v.  Rich- 
mond, 12  Wall.  (U.  S.)  349;  Hayes  v.  Holly  Springs,  114  U.  S.  120; 
Knox  County  v.  Aspinwall,  21  How.  (U.  S.)  539;  East  Oakland  v. 
Skinner,  94  U.  S.  255;  Post  v,  Kendall  Co.,  105  U.  S.  667;  Bates  Co. 


§  190.]  MUNICIPAL   CONTRACTS.  255 

notice  of  their  powers;  and  he  is  charged  with  a  knowl- 
edge of  the  law,  and  makes  a  contract  in  violation  of  the 
law  at  his  own  risk,^  So  where  the  law  commands  pub- 
lic officers,  before  entering  into  contracts,  to  advertise, 
and  contract  with  the  lowest  bidder,  a  contract  made 
without  advertising  and  without  competition  is  wholly 
void,  and  imposes  no  obligation  upon  the  public  body  as- 
sumed to  be  represented.-  So  an  offer  of  a  reward  for 
the  arrest  and  conviction  of  thieves  who  robbed  the  treas- 
ury of  the  county  and  for  the  recovery  of  the  moneys 
made  "  by  order  of  the  board  of  supervisors,  H.  D.  Lucas^ 
chairman,"  is  ultra  vires  of  the  county  commissioners  and 
void,  nor  are  the  commissioners  themselves  personally 
liable.' 

V.  Winter,  97  U.  S.  83;  Daviess  Co.  v.  Dickenson,  117  U.  S.  657;  Car- 
roll Co.  V.  Smith,  111  U.  S.  556;  Dixon  Co.  v.  Field,  111  U.  S.  83; 
Burrill  v.  Boston,  2  Cliff.  (U.  S.)  590;  Seibreicht  v.  New  Orleans,  12 
La,  Ann.  496;  Fox  v.  New  Orleans,  id.  154;  Mayor,  etc.  v.  Reynolds, 
20  Md.  1;  Baltimore  v.  Eschbach.  18  Md.  276;  Baltimore  v.  Mus- 
grove,  48  Md.  272;  Maupin  v.  Franklin  Co.,  67  Mo.  327;  Perkinson  v. 
St.  Louis,  4  Mo.  App.  322;  Cheeney  v.  Brookfield,  60  Mo.  53;  Mc- 
Caslin  v.  State,  99  Ind.  428;  Commissioners  v.  Cox,  6  Ind.  403;  State 
V.  Beyers,  86  N.  C.  588;  Yancey  v.  Hopkins.  1  Munf.  (Va.)  419. 

1  Parr  v.  Greenbush,  72  N.  Y.  463;  Brady  v.  New  York,  20  N.  Y.  312; 
McDonald  v.  Mayor,  etc.,  68  N.  Y.  23;  Argenti  v.  San  Francisco,  1& 
Cal.  255. 

2  Parr  v.  Greenbush,  72  N.  Y.  463. 

SHuthsing  v.  Bousquet,  2  McCrary  (U.  S.),  152,  156;  Treadway  v. 
Schnauber,  1  Dak.  Ty.  236. 

In  Huthsing  v.  Bousquet,  supra,  the  court  say:  "When  an  agent 
makes  a  contract  in  the  name  of  his  principal,  but  without  author- 
ity, he  binds  himself,  for  the  reason  that  if  he  (the  agent)  is  not 
bound  there  is  no  one  to  respond  to  the  third  contracting  party.  If 
in  such  case  the  agent  were  not  bound,  his  act  in  representing  him- 
self to  have  authority  would  operate  as  a  fraud  upon  the  other  con- 
tracting party.  But  if  in  such  case  the  agent  were  to  tell  the  third 
contracting  party  that  he  had  no  authority  to  bind  the  principal,  it 
would  be  the  folly  of  the  other  contracting  party  to  enter  into  such 


25G  MUNICIPAL   CONTKAOTS.  [§  191. 

§  191.  Implied  municipal  contracts. —  Although  it  is  a 
well-settled  principle  that  ultra  vires  contracts  of  mu- 
nicipal corporations  are  void,  and  that  those  who  have 
dealt  with  such  corporation  under  a  misapprehension  have 
no  standing  to  demand  the  fulfillment  of  such  contracts, 
there  are  occasions  when  this  principle  is  modified ;  the 
modification  being  spoken  of  as  the  "  doctrine  of  implied 
municipal  liability."  ^  This  doctrine  applies  to  cases 
where  money  or  other  property  of  a  party  has  been  re- 
ceived under  such  circumstances  that  the  general  law, 
independent  of  express  contract,  imposes  the  obligation 
upon  the  city  to  do  justice  with  respect  to  the  same;  that 

a  contract,  and  he  could  not  claim  to  be  defrauded.  Neither  could 
he  count  upon  a  contract  against  the  agent,  because  that  would  be 
contrary  to  the  very  terms  of  the  manifest  intent  of  the  contract. 
He  would  have  to  lie  upon  the  bed  which  he  had  made  for  himself 
with  his  eyes  open.  The  law  aims  to  relieve  a  party  against  the 
consequences  of  his  own  folly.  The  case  before  us  stands  upon  this 
principle.  The  board  of  supervisors  had  no  authority  by  law  to  make 
the  contract  on  which  the  plaintiff  relies  in  this  action.  The  plaint- 
iff was  bound  to  know  the  law,  and  we  must  proceed,  therefore, 
upon  the  assumption  that  he  did,  when  he  accepted  the  offer  and 
performed  the  services,  know  that  the  board  had  no  authority  to 
offer  the  reward.  The  offer  was  ultra  vires;  the  plaintiff  knew  it; 
it  was  his  own  folly  to  accept  such  an  offer,  and  the  court  cannot 
relieve  him."  And  see  McCurdy  v.  Rogers,  21  Wis.  197;  Richards  v. 
Warren  Co.,  31  Iowa,  389;  Boardman  v.  Hayne,  29  Iowa,  339. 

1  Wheeler  v.  Chicago,  24  111.  105;  Sangamon  Co.  v.  Springfield,  63 
111,  66;  Moore  v.  New  York,  73  N.  Y.  238;  State  Board,  etc.  v.  Railway 
Co.,  47  Ind.  407;  Louisiana  v.  Wood,  102  U.  S.  294;  Gas  Co.  v.  San 
Francisco,  9  Cal.  453;  Paul  v.  Kenosha,  22  Wis.  266;  Bridge  Co.  v. 
Frankfort,  18  B.  Mon.  (Ky.)  41;  Marsh  v.  Fulton  Co.,  10  Wall.  (U.  S.) 
676;  Adams  v.  Farnsworth,  15  Gray  (Mass.),  423;  Shrewsbury  v. 
Brown,  25  Vt.  197;  Gassett  v.  Andover,  25  Vt.  342;  Maher  v.  Chicago, 
38  111.  266;  Bryan  v.  Page,  51  Tex.  532;  State  Board  v.  Aberdeen,  56 
Miss.  518;  McSpeden  v.  Mayor,  etc.,  7  Bosw.  (N.  Y.)  601;  McCracken 
V.  San  Francisco,  16  Cal.  591;  Pimental  v.  San  Francisco,  21  Cal.  351; 
Dickinson  v.  Poughkeepsie,  75  N.  Y.  65;  Richardson  v.  Grant  Co.,  27 
Fed.  Rep.  495;  Argenti  v.  San  Francisco,  16  Cal  255. 


§  192.]  MUNICIPAL   CONTKACTS.  257 

if  the  city  obtains  money  of  another  by  mistake  or  with- 
out authority  of  law,  it  is  her  duty  to  refund  it,  not  from 
any  contract  entered  into  by  her  on  the  subject,  but  from 
the  general  obligation  to  do  justice  which  binds  all  per- 
sons, whether  natural  or  artificial ;  and  that  if  the  city 
obtains  other  property  which  does  not  belong  to  her,  it 
is  her  duty  to  restore  it,  or,  if  used  by  her,  to  render  an 
equivalent  to  the  true  owner  from  the  like  general  obli- 
gation.^ 

§  192.  Wlien  estoppel  not  applicable  to  municipal  corpo- 
rations.—  It  is  of  the  essence  of  an  estoppel  in  pais  that 
the  party  having  the  authority  to  act  in  the  matter  shall 
have  knowingly  done  an  act  to  influence  the  conduct  of 
another,  and  that  the  other  must  have  acted  in  the  faith 
of  that  act.2  A  person  having  no  authority  to  act  can- 
not by  his  conduct  estop  others  not  responsible  for  his 
conduct.  Accordingly,  no  estoppel  can  ordinarily  arise 
from  the  act  of  a  municipal  corporation  or  officer  done  in 
violation  of  or  without  authority  of  law.*  Every  person 
is  presumed  to  know  the  nature  and  extent  of  the  powers 
of  municipal  officers,  and  therefore  cannot  be  deemed  to 
have  been  deceived  or  misled  by  acts  done  without  legal 
authority.*  So  a  city  will  not  be  estopped  by  the  acts  or 
promises  of  a  committee  of  the  city  council,  or  the  acts  of 
the  city  attorney,  such  committee  being  known  to  have 
no  power  to  do  the  act  which  is  sought  to  be  effected  by 
estoppel.^ 

1  Field,  J.,  in  Argenti  v.  San  Francisco,  supra. 

2  St.  Louis,  etc.  R.  Co.  v.  Belleville,  123111.  376;  Davidson  v.  Young, 
-38  111.  145;  Schnell  v.  Chicago,  38  111.  382;  Bigelovv  on  Estoppel,  480. 

3  Bigelovv  on  Estoppel,  480. 

*  Seeger  v.  Mueller,  133  111.  86. 
5  St.  Louis,  etc.  R.  Co.  v.  Belleville,  123  111.  376. 
17 


258  MUNICIPAL   CONTRACTS.  [§§  193,  194. 

§  193.  When  estopped  to  deny  irregularity. —  Although^ 
as  has  been  shown,  a  municipal  corporation  may  set  up 
as  a  defense  to  an  action  upon  a  contract  alleged  to  have 
been  made  by  it,^its  own  want  of  power  to  contract,  yet 
it  may  be  estopped  from  availing  itself  of  irregularities 
in  the  exercise  of  powers  conferred.^  Acts  of  the  general 
governing  body  of  a  municipal  corporation,  within  their 
general  powers,  which  were  published,  represented  and 
held  out  as  valid,  with  invitations  to  individuals  to  enter 
into  engagements  and  expend  money  and  labor  on  the 
faith  of  them,  may  be  assumed  by  those  dealing  with  the 
municipal  authorities  to  be  as  represented;  and  the  corpo-. 
ration  having  received  the  fruits  of  contracts  entered  into 
on  the  faith  of  such  representations  will  be  estopped  from 
alleging  a  mere  irregularity,  not  of  the  substance  of  the 
power  or  jurisdictional  in  its  character,  to  avoid  them.^ 

§  194.  Ratification  of  ultra  vires  contracts. —  As  a  mu- 
nicipal corporation  has  no  authority  to  contract  in  excess 
of  its  chartered  powers,  therefore  no  ratification  by  it 
could  validate  such  contracts;  nor  will  ratification  validate 
an  abuse  of  authority  by  an  ofiicer  where  his  act  goes  be- 
yond the  charter  powers.  An  act  which  does  not  follow 
the  requirements  of  a  statutory  enactment,  under  no  cir- 
cumstances binds  the  corporation.'  So  where  the  charter 
or  statute  binding  upon  the  corjDoration  has  committed  a 

1  Moore  v.  New  York,  73  N.  Y.  238;  Knox  County  v.  Aspinwall,  21 
How.  (U.  S.)  539;  Moran  v.  Commissioners,  3  Black  (U.  S.).  732;  Bis- 
sell  V.  Jefferson ville,  24  How.  (U.  S.)  387;  Marsh  v.  Fulton  County, 
10  Wall.  (U.  S.)  676. 

2  Moore  v.  New  York,  supra;  Hitchcock  v.  Galveston,  96  U.  S.  341; 
Dill.  Mun.  Corp.,  §  457. 

sPaterson  v.  Mayor,  17  N.  Y.  449;  Brady  v.  Mayor,  17  N.  Y.  313; 
Hodges  V.  Buffalo,  2  Denio  (N.  Y.),  110;  Gates  v.  Hancock,  45  N.  H. 
538;  Reilly  v.  Philadelphia,  60  Pa.  St.  467;  Withelmv.  Cedar  County, 
50  Iowa,  534;  Smith  v,  Newburgh,  77  N.  Y.  130. 


§  195.]  MUNICIPAL   CONTEACTS.  2o9 

class  of  acts  to  particular  officers  or  agents  other  than 
the  governing  body,  or  where  it  has  prescribed  certain 
formalities  as  conditions  to  the  performance  of  any  de- 
scription of  corporate  business,  the  proper  functionaries 
must  act  and  the  designated  forms  must  be  observed, 
and  generally  no  act  of  recognition  or  ratification  can 
supply  a  defect  in  these  respects.^  Persons  dealing  with 
a  municipal  corporation  are  bound  to  know  the  extent 
of  its  authority,  and  when  the  charter  has  not  been 
complied  with  they  are  not  in  a  position  to  set  up  a  rati- 
fication.'^  "While  ratification  is  equivalent  to  previous 
authority,  the  assent  of  the  municipality  must  be  shown. 
So  ratification  may  be  inferred  from  acquiescence  after 
knowledge  of  all  the  material  facts,  or  where  the  acts  of 
the  corporation  are  inconsistent  with  any  other  supposi- 
tion.^ 

§  195.  Contracts  of  compromise  and  avMtration. —  It  is 
well  settled  that  a  municipal  corporation  has  power  to 

1  Paterson  v.  Mayor,  supra. 

2  Marsh  v.  Fulton  County,  10  Wall.  (U.  S.)  676;  Cowen  v.  West 
Troy,  43  Barb.  (N.  Y.)  48;  Brown  v.  Mayor,  63  N.  Y.  239;  McDonald  v. 
Mayor,  68  N.  Y.  23;  Horton  v.  Thompson,  71  K  Y.  513;  Hague  v. 
Philadelphia,  48  Pa.  St.  528;  Green  v.  Cape  May,  41  N.  J.  L,  45; 
Sault  Ste.  Marie  County  v.  Van  Duzen,  40  Mich.  429;  Jefferson 
County  V.  Arrighi,  54  Miss.  668;  Nash  v.  St.  Paul,  11  Minn.  174;  Mc- 
Cracken  v.  San  Francisco,  16  Cal.  591;  Alexander  v.  Caldwell,  83 
N.  Y.  480;  Union  Township  v.  Gibboney,  94  Pa.  St.  534;  Parsons  v. 
Monmouth,  70  Me.  262;  Bryan  v.  Page,  51  Tex.  532. 

3  Wilson  V.  School  District,  32  N.  H.  118;  People  v.  Swift,  31  Cal.  26; 
Blen  V,  Bear  River  County,  20  Cal.  602;  Clark  v.  Lyons  County, 
8  Nev.  181;  Howe  v.  Keeler,  27  Conn.  538;  Emerson  v.  Newburgh,  13 
Pick.  (Mass.)  377;  Mills  v.  Gleason,  11  Wis.  470;  Backman  v.  Charles- 
ton, 42  N.  H.  125;  Trott  v.  Warren,  2  Fairf.  (11  Me.)  227;  Topsham 
V.  Rogers,  42  Vt.  199;  St.  Louis  v,  Armstrong,  56  Mo.  298;  Lamm  v. 
Deposit  Association,  40  Md.  233;  Chouteau  v.  Allen,  70  Mo.  290;  New 
Orleans  v.  South  Bank,  31  La.  Ann.  560. 


2G0  MUNICIPAL   CONTRACTS.  [§  196. 

effect  the  compromise  of  claims  held  against  it.^  So  a 
city  council  has  authority  to  compromise  with  a  party 
against  whom  the  city  holds  a  judgment,  by  accepting, 
before  the  expiration  of  the  time  for  appeal,  one-half  of 
such  judgment  and  costs  as  payment  in  full.^  And  where 
a  judgment  had  been  obtained  against  a  fire  district  for 
injuries  resulting  from  the  conducting  of  electricity  into 
a  house  by  means  of  one  of  the  wires  in  the  district's  elec- 
tric lire-alarm  system,  it  was  held  that  a  settlement  of 
the  claim  by  compromise  was  not  ultra  vires  or  without 
consideration.'  So,  also,  a  municipal  corporation,  unless 
disabled  by  positive  law,  can  submit  to  arbitration  all  un- 
settled claims,  with  the  same  liability  to  perform  the 
award  as  would  rest  upon  a  natural  person;  but  such 
power  must  be  exercised  by  ordinance  or  resolution  of 
the  corporate  authorities.*  But  where  a  way  was  laid 
out  under  what  was  termed  the  "  betterment  law,"  for 
determining  the  amount  of  the  damages  of  the  land- 
owners by  the  laying  out  of  a  street  under  such  law,  an 
agreement  by  which  a  city  undertook  with  the  owners  of 
land  taken  for  a  street  to  submit  the  assessment  of  dam- 
ages and  betterments  to  arbitration  was  held  ultra  vires 
and  void,  and  the  city  could  not  maintain  an  action  to 
enforce  the  award  made  under  such  submission.* 

§  196.  Limitation  on  contracting  indebtedness. —  Con- 
stitutional provisions  exist  in  many  of  the  states  of  the 

1  People  V.  San  Francisco,  27  CaL  655;  People  v.  Coon,  25  Cal.  648; 
Grimes  v.  Hamilton  Co.,  37  Iowa,  290;  Mills  Co.  v.  Burlington,  47 
Iowa,  66;  State  r.  Martin,  43  N.  W.  Rep.  244;  Bean  v.  Joy,  23  Me.  117. 

2Agnew  V.  Brail,  124  111.  312. 

3  Prout  V.  Inhabitants,  etc.,  28  N.  E.  Rep.  679. 

4  Shawneetown  v.  Baker,  85  111.  563;  Kane  v.  Fond  du  Lac,  40  Wis. 
495;  Dill.  Mun.  Corp.,  §  478;  Dix  v.  Dummerston,  19  Vt.  263;  Paret 
V.  Bayonne,  39  N.  J.  L.  559. 

^Somerville  v.  Dickerman,  127  Mass.  272L 


§  196.]  MUNICIPAL   CONTRACTS.  261 

Union  prohibiting  municipal  corporations  from  increas- 
ing their  indebtedness  beyond  certain  designated  limits, 
the  limit  usually  being  fixed  by  reference  to  some  speci- 
fied per  centum  of  the  taxable  property  of  the  munici- 
pality. Therefore,  where  a  city  or  other  municipal  cor- 
poration is  so  prohibited,  when  such  municipality  shall 
have  reached  the  limit  prescribed  by  the  constitution  it 
is  prohibited  from  making  any  contract  whereby  an  in- 
debtedness is  created,  even  for  the  necessary  current  ex- 
penses in  the  administration  of  the  affairs  and  govern- 
ment of  the  corporation.^  Such  constitutional  provisions 
cannot  be  evaded  by  contracting  indebtedness  to  be  dis- 
charged in  the  future  out  of  taxes  which  are  to  be  levied 
in  the  future,  nor  can  a  city  by  any  device  actually  in- 
crease its  indebtedness, —  such  increase  above  the  limit 
fixed  being  illegal.'^  So  if  a  contract  is  void  because  it 
creates  a  liability  in  excess  of  the  limit  of  indebtedness, 
the  municipality  has  no  power  to  make  any  appropria- 
tion therefor,  or  to  levy  a  tax  to  pay  interest.*  And  if 
an  action  be  brought  against  the  municipal  authorities  to 
compel  them  to  levy  a  tax  for  the  payment  of  an  in- 
debtedness in  excess  of  the  constitutional  limit,  a  tax- 
payer is  entitled  to  intervene  and  defend  if  the  munici- 
pal authorities  refuse  to  set  up  the  defense.*  ■  All  persons 

1  Price  V.  Quincy,  105  111.  138;  Baltimore  v.  Gill,  31  Md.  875;  Spring- 
field V.  Edwards,  84  111.  77;  Weston  v.  Syracuse,  17  N.  Y.  110;  Hitch- 
cock V.  Galveston. 96  U.S.  341;  United  States  v.  Ft.  Scott,  99  U.  S. 
152;  French  v.  Burlington,  43  Iowa,  614;  Council  Bluffs  v.  Stewart, 
51  Iowa,  385;  Appeal  of  City  of  Erie,  91  Pa.  St.  398;  Buchanan  v. 
Litchfield,  103  U.  S.  278;  Walsh  v.  Augusta,  67  Ga.  293. 

2  Springfield  v.  Edwards,  84  111.  626;  Law  v.  People,  87  111.  385; 
Fuller  V.  Chicago,  89  111.  282;  Fuller  v.  Heath,  89  111.  296;  Garrison 
V.  Chicago,  7  Biss.  480. 

3  Law  V.  People,  supra. 

<  Richards  v.  Supervisors  of  Lyon  County,  69  Iowa,  613. 


2G2  MUNICirAL   CONTKACTS.  [§  197. 

are  chargeable  with  notice  of  the  constitutional  limita- 
tion on  the  power  of  municipal  corporations  to  become 
indebted.^ 

§  197.  Instances  ivhere  increase  denied. —  If  the  munic- 
ipal indebtedness  has  reached  the  constitutional  limit,  a 
city  cannot  enter  into  an  agreement  to  pay  a  stated  sum 
as  rent  for  a  market-house,  if  its  annual  revenues  are  in- 
sufficient, over  and  above  the  interest  of  its  indebtedness 
and  the  ordinary  expenses  of  the  city,  to  meet  the  rent 
proposed  to  be  paid.^  In  order  to  bring  the  indebtedness 
within  the  constitutional  limit,  however,  it  is  not  neces- 
sary that  the  debt  contracted  should  be  actually  payable. 
Thus,  where  a  city  contracted  for  the  construction  of 
water-works,  it  was  held  that  it  became  indebted  at  the 
time  of  making  the  contract,  and  not  merely  upon  com- 
pletion and  acceptance  of  the  work.^  But  a  constitutional 
provision  limiting  the  amount  of  indebtedness  does  not 
affect  contracts  made  before  the  adoption  of  the  provis- 
ion.*   It  has  been  held  in  Iowa  that  a  contract  made  by 

1  People  V.  May,  9  Colo.  404;  Law  v.  People,  87  111.  385;  French  v. 
Burlington,  42  Iowa,  614. 

In  People  v.  May,  supra,  the  court  say:  "The  hardships  and  in- 
conveniencies  resulting  from  this  construction  are  urged  upon  our 
attention.  To  such  appeals  the  language  of  the  courts  is  uniform. 
The  province  of  the  judiciary  is  not  to  make  the  law,  but  to  con- 
strue it.  The  meaning  of  a  constitutional  provision  being  plain,  it 
must  stand,  be  recognized  and  obeyed  as  the  supreme  law  of  the 
land.  It  is  not  for  us,  but  for  those  who  made  the  instrument,  to 
supply  its  defects.  If  the  legislature  or  the  court  may  take  that 
office  upon  themselves,  or  under  color  of  construction,  or  upon  any 
other  specious  ground,  they  may  depart  from  that  which  is  plainly 
declared,  the  people  may  well  despair  of  ever  being  able  to  set  any 
boundary  to  the  powers  of  the  government." 

2  Appeal  of  City  of  Erie,  91  Pa.  St.  398. 

sCulbertson  v.  Fulton,  127  111.  30;  Law  v.  People,  87  111.  385. 

*  County  of  Moultrie  v.  Bank,  92  U.  S.  631;  Davenport,  etc.  Co.  v. 


§  198.]  MUKICIPAL   CONTKACTS.  203 

a  city  whose  indebtedness  has  already  reached  the  con- 
stitutional limit,  by  which  a  contractor  agrees  to  construct 
a  sewer,  and  to  accept  in  payment  of  the  contract  price 
certificates  assessing  the  benefits  against  the  property 
benefited,  does  not  create  any  liability  on  the  part  of  the 
municipality,  and  is  not  within  the  constitutional  pro- 
hibition.^ "Where  the  charter  of  a  municipal  corporation 
provided  that  the  common  council  should  have  no  power 
"  to  contract  debts,  inciir  liabilities,  or  make  expenditures 
in  any  one  jesiv  which  shall  exceed  the  revenue  for  the 
same  year,"  a  contract  entered  into  without  submitting 
the  question  to  the  tax-payers,  for  a  supply  of  water  for 
a  term  of  years  at  a  cost  per  year  which  would  not  exceed 
any  such  percentage  as  could  be  allowed  in  any  one  year, 
was  held  void,  and  there  could  be  no  recovery  thereon 
for  any  water  that  had  been  furnished  thereunder.^ 

§  198.  JEqiiity  ivill  enjoin  illegal  creation  of  debt — A 
municipal  corporation  will  not  be  permitted  to  dispose 
illegally  of  corporate  money  or  to  illegally  create  a  debt, 
and  may  be  prevented  by  an  application  of  resident  tax- 
payers for  an  injunction.^  "  Of  the  right  of  resident  tax- 
Davenport,  13  Iowa,  229;  Bound  v.  Wisconsin  Cent.  R.  Co.,  45  Wis. 
543. 

1  Davis  V.  Des  Moines,  71  Iowa,  500. 

2  Niles  Water-works  v.  Niles,  59  Mich.  311. 

3  Crampton  v.  Zabriskie,  101  U.  S.  601;  Gifford  v.  Railroad  Co.,  10 
N.  J.  Eq.  171;  Baltimore  v.  Gill,  31  Md.  375;  Wade  v.  Richmond,  18 
Grat.  (Va.)  583;  Page  v.  Allen,  58  Pa.  St.  338;  Stevens  v.  Railroad 
Co.,  29  Vt.  546;  Webster  v.  Harrington,  32  Conn.  131;  Terrett  v. 
Sharon,  34  Conn.  105:  Merrill  v.  Plainfield,  45  N.  H.  126;  Norraand 
v.  Otoe  Co.,  8  Neb.  18;  Oliver  v.  Krightley,  24  Ind.  514;  Drake  v. 
Phillips,  40  111.  388;  Grant  v.  Davenport,  36  Iowa,  396;  Hooper  v. 
Ely,  46  Mo.  505;  Douglass  v.  Placerville,  18  Cal.  643;  Patterson  v. 
Bowes,  4  Grant  (Canada),  170;  West  Guillimbury  v.  Railroad  Co.,  23 
Grat.  (Va.)  383. 


26J:  MUNICIPAL   CONTRACTS.  [§  198. 

payers  to  invoke  the  interposition  of  a  court  of  equity  to 
prevent  an  illegal  disposition  of  the  raone3''s  of  the  county, 
or  the  illegal  creation  of  a  debt  which  they  in  common 
with  other  property  holders  of  the  county  may  otherwise 
be  compelled  to  pay,  there  is  at  this  day  no  serixDus  ques- 
tion. The  right  has  been  recognized  by  the  state  courts 
in  numerous  cases,  and  from  the  nature  of  the  powers 
exercised  by  municipal  corporations,  the  great  danger  of 
their  abuse,  and  the  necessity  of  prompt  action  to  prevent 
irremediable  injuries,  it  would  seem  eminently  proper  for 
courts  of  equity  to  interfere  upon  the  application  of  the 
tax-payers  of  a  county  to  prevent  the  consummation  of  a 
wrong,  in  excess  of  their  power,  to  create  burdens  upon 
property  holders.  Certainly  in  the  absence  of  legislation 
restricting  the  right  to  interfere  in  such  cases  to  public 
officers  of  the  state  and  county,  there  would  seem  to  be  no 
substantial  reason  why  a  bill  by  or  on  behalf  of  individual 
tax-payers  should  not  be  entertained  to  prevent  the  mis- 
use of  corporate  powers."  ^ 

1  Field,  J,,  in  Crampton  v.  Zabriskie,  101  U.  S.  601. 


CHAPTER  XY. 

PARTICULAR  POWERS  AND  LIABILITIES   OF  MUNICIPAL* 
CORPORATIONS. 

§  199.  Exclusive  control  over  streets. 

200.  When  estopped  to  deny  existence  of  street. 

201.  Power  to  grade  and  improve. 

202.  Discretionary  powers  as  to  improvementi 

203.  Liability  for  consequential  damages. 

204.  Liability  for  accidents  upon  streets. 

205.  Instances  of  liability  for  defective  streets. 

206.  Notice  to  authorities  required. 

207.  Sewers  —  General  powers  as  to. 

208.  Discretion  in  selecting  sewer  system. 

209.  Duty  to  provide  sewer  outlet. 

210.  City  not  insurer  of  condition  of  sewer. 
311.  Liability  for  injury  from  defective  sewer. 

212.  Power  to  abate  nuisances. 

213.  Liability  as  to  nuisances. 

214.  Powers  as  to  quarantine  regulations. 

215.  Powers  as  to  public  wharves. 

216.  Exclusive  privileges  to  gas  or  water  companies, 
817.  Contracts  as  to  gas  and  water  supply. 

218.  Power  to  regulate  rates. 

219.  Liability  for  damages  owing  to  inadequate  water  supply. 

220.  Doctrine  of  respondeat  superior. 

221.  Distinction  between  public  gttasz-corporations  and  municipal 

corporations. 

222.  Not  liable  for  damages  arising  from  ultra  vires  acts  of  officers. 

§  199.  Exclusive  control  over  streets. — When  the  charter 
of  a  city  does  not  confer  upon  it  in  express  terras  the  ex- 
clusive power  over  its  streets,  it  has  not  the  control  of 
them  to  the  exclusion  of  the  sovereign  power  of  the  state.^ 

1  Grand  Rapids  Electric  Co.  v.  Gas  Co.,  21  Am.  &  Eng.  Corp.  Cas. 
270;  Dill.  Mun.  Corp.,  §  547;  State  v.  Coke  Co.,  18  Ohio  St.  262;  Gas 


266  STKEETS,  SEWERS,  ETC.  [§§  200,  201. 

Kothing  short  of  the  whole  sovereign  power  of  the  state 
can  confer  exclusive  rights  and  privileges  in  public  streets 
dedicated  or  acquired  for  public  use,  and  which  are  held 
in  trust  for  the  public  at  large.  It  is  the  general  doctrine 
that  municipalities,  under  the  power  of  exclusive  control 
over  their  streets,  may  allow  any  use  of  them  consistent 
with  the  public  objects  for  which  they  are  held.^ 

§  200.  WJioi  estopped  to  deny  existence  of  street. —  If 
the  authorities  of  a  city  or  town  have  treated  a  place  as 
a  public  street,  taking  charge  of  it  and  regulating  it  as 
they  do  other  streets,  and  an  individual  is  injured  in  con- 
sequence of  the  negligence  and  carelessness  with  which 
this  is  done,  the  corporation  cannot,  when  it  is  sued  for 
such  injury,  throw  the  party  upon  an  inquiry  into  the  regu- 
larity of  the  proceedings  by  which  the  land  became  a 
street  or  into  the  authority  by  which  the  street  was  origi- 
nally established.^ 

§  201.  Power  to  grade,  improve  and  alter  streets. — If 
the  authorities  of  a  municipal  corporation  are  authorized 
by  an  act  of  the  legislature  to  grade,  improve,  alter  or 

Co.  V.  Light  Co.,  115  U.  S.  659;  Cooley,  Const.  Lim.  38,  207,  208;  Gas 
Light  Co.  V.  Gas  Co.,  25  Conn.  19;  Gas  Light  Co.  v.  Saginaw,  28  Fed. 
Rep.  529;  Gas  Co.  v.  Middleton,  59  N.  Y.  228;  East  Hartford  v.  Bridge 
Co.,  10  How.  (U.  S.)  511;  Minturn  v.  Larue,  23  How.  (U.  S.)  435;  Har- 
rison V.  State,  9  Mo.  530;  Wright  v.  Nagle,  101  U.  S.  796;  Davis  v. 
Mayor,  14  N.  Y.  506;  Railroad  Co.  v.  Railway  Co.,  10  Wall.  (U.  S.)  52; 
Same  v.  Same,  12  Fed.  Rep.  308;  Parkersburg  Gas  Co.  v.  Parkers- 
burg,  4  S.  E.  Rep.  (W.  Va.)  650. 

1  Grand  Rapids  Electric  Light  Co.  v.  Grand  Rapids,  etc.  Gas  Co., 
supra. 

-'Mayor  v.  Sheffield,  4  Wall.  (U.  S.)  189;  James  v.  Portage,  48  Wis. 
677;  Bishop  v.  Centralia,  49  Wis.  609;  Coates  v.  Canaan,  51  Vt.  131; 
Sewell  V.  Cahous,  75  N.  Y  45;  Steck  v.  Lancaster,  57  N.  H.  88;  Man- 
derchid  v.  Dubuque,  25  Iowa,  108;  Aurora  v.  Cobshire,  55  Ind.  484; 
Phelps  V.  Mankato,  23  Minn.  277. 


§  201.]  STREETS,  SEWERS,  ETC.  267 

re-lay  streets,  such  authority  extends  only  to  public  streets 
or  highways,  and  will  not  give  authority  to  alter  any 
road  owned  by  other  persons.^  As  a  municipal  corpora- 
tion cannot  contract  in  any  other  mode  than  is  author- 
ized by  its  charter,  if  the  preliminaries  to  be  observed, 
and  the  manner  in  which  a  contract  for  a  local  improve- 
ment shall  be  entered  into,  are  prescribed  by  a  manda- 
tory charter  provision  or  law,  its  directions  must  be  com- 
plied with.2  And  if  such  contract  be  invalid  when  made 
for  a  failure  to  comply  with  the  statutory'-  requirements, 
its  subsequent  ratification  by  the  corporation  requires  the 
observance  of  the  same  formalities  and  provisions  neces- 
sary to  be  complied  with  in  the  making  of  a  valid  contract.' 
A  general  power  to  lay  out  and  open  streets  in  a  city  im- 
plies power  to  establish  the  grade  of  such  streets;*  and 
power  to  grade  streets  includes  power  to  make  contracts 
relating  to  the  same,  w^ith  respect  to  the  work  to  be  done 
and  compensation  to  be  paid.^  Accordingly,  when  to 
make  a  contract  for  the  improvement  of  a  street,  and  to 
provide  the  funds  to  pay  for  it,  the  charter  prescribed 

1  Quin  V.  City  of  Paterson,  37  N.  J.  L.  35;  McGuire  v.  Rapid  City, 
43  N.  W.  Rep.  706. 

2Terre  flaute  v.  Lake,  43  Ind.  480;  People  v.  San  Francisco,  36 
Cal.  595;  Butler  v.  Charleston,  7  Gray  (Mass.),  13;  Zottman  v.  San 
Francisco,  30  Cal.  96;  Brady  v.  Mayor,  80  N.  Y.  313;  Murphey  v. 
Louisville,  9  Bush  (Ky.),189;  Stecket  v.  East  Saginaw,  33  Mich.  104; 
Taft  V.  Pittsford,  88  Vt.  386;  Dill  v.  Inhabitants,  7  Met.  (Mass.)  438; 
Bridgeport  v.  Railroad  Co.,  15  Conn.  475;  Marsh  v,  Fulton  Co.,  10 
Wall.  (U.  S.)  676;  Horn  v.  Baltimore,  30  Md.  318;  Steam  Nav.  Co.  v. 
Dandridge,  8  Gill  &  J.  (Md.)  348;  Baltimore  v.  Eschbach,  18  Md.  376; 
Haynes  v.  Covington,  13  Sm.  &  M.  408. 

« Town  of  Durango  v.  Pendleton,  8  Colo.  357. 

*  Smith  V.  Washington,  30  How.  (U.  S.)  135:  Himmelmann  v.  Hoad- 
ley,  44  Cal.  313;  Fish  v.  Mayor,  6  Paige  (N.  Y.),  368;  Creal  v.  Keokuk, 
4  Greene  (Iowa),  47. 

^Sturtevant  v.  Alton,  3  McLean  (U.  S.),  393;  People  v.  Flagg,  17 
N.  Y.  584, 


2G8  STREETS,  SEWERS,  ETC.  [§  202, 

that  it  should  only  be  done  by  local  assessments  on  abut- 
ting property,  this  amounts  to  a  direct  inhibition  against 
making  any  contract  for  such  improvement  only  as  such 
mode  is  pursued,  and  the  failure  or  omission  of  the  city 
to  create  the  fund  from  the  sources  indicated  to  pay  for 
such  improvement,  when  made,  will  not  subject  the  city 
to  any  general  liability  therefor.^ 

§  202,  Discretionary poiver  as  to  improvement. — Where 
a  city,  by  special  charter  or  otherwise,  is  vested  with  the 
exclusive  control  of  its  streets  and  with  power  to  regu- 
late or  improve  the  same,  the  manner  in  which  they  may 

1  Portland  L.  &  M.  Co.  v.  East  Portland,  18  Oreg.  21. 

In  Portland,  etc.  Co.  v.  East  Portland,  supra,  Lord,  J.,  in  discuss- 
ing this  question,  said: 

"The  reason  is  plain.  As  the  city  is  without  any  general  power 
to  contract  for  and  provide  the  funds  to  pay  for  such  improvements 
except  by  way  of  local  assessment,  it  necessarily  results  that  it  can- 
not be  subject  to  any  general  liability.  To  subject  the  city  to  a 
general  liability  there  must  be  some  general  power  under  which  it 
would  be  authorized  to  raise  the  funds  to  pay  for  such  improve- 
ments. But  when  such  general  power  is  conferred,  and  an  improve- 
ment is  projected  to  be  paid  for  out  of  funds  to  be  derived  from  local 
assessments,  and  the  city  authorities  upon  whom  is  devolved  the 
duty  neglect  or  fail  to  take  the  requisite  proceedings  to  create  the 
lien  which  is  to  supply  the  funds  to  pay  for  such  improvement, 
the  improvement  being  within  the  scope  of  the  general  power  of  the 
corporation  independent  of  the  special  mode  by  local  assessments, 
such  neglect  or  omission  after  the  improvement  is  made  will  subject 
the  city  to  a  general  liability  to  pay  therefor.    .    .    .' 

"A  general  liability  is  based  upon  the  general  power  conferred  to 
make  such  improvements  and  to  defray  the  expenses  thereof  out  of 
the  general  fund;  for  if  the  city  has  not  such  general  power,  but  is 
confined  exclusively  in  making  and  defraying  the  expenses  of  such 
improvements  to  the  fund  derived  from  local  assessments  upon 
abutting  property,  there  would  be  no  authority  even  though  there 
was  a  failure  to  perform  all  the  required  acts  intended  to  provide 
such  fund,  and  to  subject  the  acts  to  a  general  liability.  It  would 
be  ttltra  vires." 


§  203.]  STKEETS,  SEWERS,  ETC.  2G9 

be  improved  must,  in  a  large  measure,  be  left  to  the  dis- 
cretion of  the  authorities;  but  when  the  discretion  has 
been  exercised  and  the  street  or  improvement  made,  the 
duty  of  keeping  it  in  repair  is  ministerial,  and  for  neglect 
to  perform  such  duty  an  action  will  lie.^  So  the  authori- 
ties of  a  city  may  rightfully  cause  a  street  to  be  graded, 
and  w^hen  the  entire  width  is  not  needed  for  travel  they 
may  cause  a  strip  in  the  center  thereof  to  be  sodded,  in- 
stead of  graveling  the  entire  street,  and  provide  for  the 
payment  of  the  cost  thereof  by  special  assessment  upon 
the  property  benefited  thereby.^ 

§  203,  Liiibility  for  consequential  damages  caused  J)y 
improvement. —  It  is  the  general  doctrine  that  persons 
appointed  or  authorized  by  law  to  make  or  improve  a 
highway  are  not  answerable  for  consequential  damages 
if  they  act  within  their  jurisdiction  and  with  care  and 
skill.^  Accordingly,  a  municipal  corporation  is  not  liable 
for  consequential  damages  where  the  act  complained  of 
was  done  by  it  or  its  officers  under  and  pursuant  to  au- 
thority conferred  by  a  valid  act  of  the  legislature,  and 

1  Urquhart  v.  Ogdensburg,  91  N.  Y.  67;  Hines  v.  Lockport,  50  N.  Y. 
238;  Mills  v.  Brooklyn,  32  N.  Y.  489;  Lansing  v.  Toolan,  37  Mich.  152; 
Marquette  v.  Cleary,  id.  296;  Darling  v.  Bangor,  68  Me.  112;  Davis 
V,  City  Council,  51  Ala.  139;  Campbell  v,  Montgomery,  53  id.  527; 
White  V.  Yazoo  City,  27  Miss.  357;  Hill  v.  Charlotte,  72  N.  C.  55; 
Dewey  v.  Detroit,  15  Mich.  307;  Carr  v.  Northern  Liberties,  86  Pa.  St. 
324;  Grant  v.  Erie,  69  Pa.  St.  420;  Western  College  v.  Cleveland,  12 
Ohio  St.  375. 

2  Murphy  v.  Peoria,  119  111.  509. 

3  Transportation  Co.  v.  Chicago,  99  TJ.  S.  641;  British  Cast-plate  Co. 
V.  Meredith,  4  Durnf.  &  E.  794;  Sutton  v.  Clarke,  6  Taunt.  28;  Boul- 
ton  V.  Crowther,  2  Barn.  &  Cres.  703;  Green  v.  Borough  of  Reading, 
9  Watts  (Pa.),  382;  O'Connor  v.  Pittsburg,  18  Pa.  St.  187;  Callendar 
V.  Marsh,  1  Pick.  (Mass.)  418;  Smith  v.  Washington,  20  How.  (U.  S.) 
135. 


270  STREETS,  SEWERS,  ETC.  [§  203. 

there  had  been  no  want  of  reasonable  care  or  want  of 
reasonable  skill  in  the  execution  of  the  power.^  So  a 
municipal  corporation  authorized  by  law  to  improve  a 
street  by  building  on  the  line  thereof  a  bridge  over  or 
a  tunnel  under  a  navigable  river  where  it  crosses  the 
street  incurs  no  liability  for  the  damages  unavoidably 
caused  to  adjoining  property  by  obstructing  the  streets 
or  the  river,  unless  such  liability  be  imposed  by  statute.- 
Nor  is  a  municipal  corporation  liable  for  consequential 
Injury  to  abutting  lots  owing  to  a  change  in  the  grade  of 
a  street  where  such  change  is  made  under  authority  of 
law  and  with  due  care.*  And  if  in  the  process  of  repairing 
or  "grading  a  street  the  walls  of  a  dwelling-house  or  other 
building  lose  their  support  and  in  consequence  fall,  the 
owner  cannot  recover  damages,  provided  due  care  has  been 
used.*    Where,  however,  the  city,  in  grading  the  streets 

iDill.  Mun.  Corp.,  §  987;  Transportation  Co.  v.  Chicago,  99  U.  S. 
635;  Smith  v.  Washington,  20  How.  (U.  S.)  135;  Goszler  v.  George- 
town, 6  Wheat.  (U.  S.)  593;  Tyson  v.  Milwaukee,  50  Wis.  78;  Owens 
V.  Milwaukee,  47  Wis.  461;  Humes  v.  Mayor,  1  Humph.  (Tenn.)  403; 
Nebraska  City  v.  Lampkin,  6  Neb.  27;  Stockford  v.  St.  Louis,  4  Mo. 
App.  564;  Hunt  v.  Boonville,  65  Mo.  620;  White  v.  Yazoo  City,  27 
Miss.  357;  Alden  v.  Minneapolis,  24  Minn.  254;  Kaist  v.  St.  Paul  R. 
Co.,  22  Minn.  118;  Pontiac  v.  Carter,  32  Mich.  164:  Reynolds  v.  Shreve- 
port,  13  La.  Ann.  426;  Newport  Bridge  Co.  v.  Foote.  9  Bush  (Ky.), 
264;  Noyes  v.  Mason  City,  53  Iowa,  418;  Quincy  v.  Jones,  76  111.  231; 
Fulla  V.  Atlanta,  66  Ga.  80;  Dorman  v.  Jacksonville,  13  Fla.  538; 
Simmons  v.  Camden,  26  Ark.  276;  Shaw  v.  Crocker,  42  Cal.  435;  Tren- 
ton, etc.  Co.  V.  Rabb,  36  N.  J.  L.  335;  Carr  v.  Northern  Liberties,  35 
Pa.  St.  324;  Barritt  v.  New  Haven,  42  Conn.  174;  Simmons  v.  Provi- 
dence, 12  R.  1.  8;  Hovey  v.  Mayor,  43  Me.  322. 

2  Transportation  Co.  v.  Chicago,  99  U.  S.  635. 

3  Smith  V.  City  of  Eau  Claire,  78  Wis.  457;  Dore  v.  Milwaukee,  42 
Wis.  108;  Dill.  Mun.  Corp.,  gi^  988,  990. 

4  Mitchell  V.  Rome,  49  Ga.  19;  St.  Louis  v.  Gurno,  12  Mo.  414;  Pon- 
tiac V.  Carter,  32  Mich.  164;  Quincy  v.  Jones,  76  111.  231;  Chambers 
V.  Satterlee,  40  Cal.  297;  Crossett  v.  Janesville,  28  Wis.  420. 


§  204.]  STKEETS,  SEWEKS,  ETC.  271 

and  making  public  improvements,  fails  to  exercise  proper 
care  and  skill  in  the  selection  of  a  jplan^  and  by  reason 
thereof  an  injury  to  the  owner  of  private  property  occurs, 
which  by  the  exercise  of  reasonable  care  and  skill  could 
have  been  avoided,  the  city  is  liable  for  such  injury.^  IS"© 
responsibility  attaches,  it  has  been  held,  for  damages 
done  by  the  diversion  of  surface  water,  where  the  diver- 
sion is  merely  incidental  to  and  occasioned  by  the  making 
or  alteration  of  street  grades.^  But  it  has  been  held,  q<xv 
the  other  hand,  that  where  a  municipal  corporation  puts 
into  execution  a  scheme  of  improvement  by  which  sur- 
face water,  collected  from  a  large  area,  is  prevented  from 
following  the  grades  of  the  street,  and  is  carried  by  arti- 
ficial means  from  where  it  Avould  otherwise  be  discharged 
and  made  to  flow  onto  the  land  of  one  person  in  ease  of 
the  lands  of  others,  there  an  actionable  wrong  is  commit- 
ted.' And  where  the  quantity  of  surface  water  sent  to 
the  point  of  discharge  is  increased  by  an  enlargement  of 
the  area  of  drainage,  but  such  enlargement  results  en- 
tirely from  making  the  grade  of  the  streets  conform  to 
the  grade  established  by  the  proper  authority,  any  injury 
resulting  from  the  increase  in  the  quantity  of  water  dis- 
charged at  that  point  is  regarded  in  law  as  damnum 
absque  injuria.^ 

§  204.  LiaMlity  for  accidents  upon  streets. — A  munici- 
pal corporation  is  not  an  insurer  against  accidents  upon 
its  streets  and  sidewalks,  as  seems  to  be  quite  generally 
supposed  by  the  community  at  large,  nor  is  every  defect 

^  City  of  Valparaiso  v.  Adams,  123  Ind.  250;  Derinzy  v.  Ottawa,  15 
Ont.  Rep.  712. 

2  Miller  v.  Norristown,  47  N.  J.  Eq.  62. 

3  Miller  v.  Norristown,  supra;  Field  v.  West  Orange,  36  N.  J.  Eq. 
118,  37  id.  600;  Torrey  v.  Scranton,  133  Pa.  St.  173. 

*  Miller  v.  Norristown,  supra. 


272  STREETS,  SEWEKS,  ETC.  [§  204. 

therein,  though  it  may  cause  the  injury  sued  for,  action- 
able. It  is  sufficient  if  the  streets  are  in  a  reasonably 
safe  condition  for  travel  in  the  ordinary  modes  by  night 
as  Avell  as  by  day.^  Accordingly,  a  city  is  not  liable  for 
injuries  caused  to  a  person  by  others  while  using  the 
public  streets  for  coasting.^  Nor  to  a  person  injured  by 
the  discharge  of  a  cannon  by  a  crowd  collected  together 
for  the  purpose  of  firing  the  cannon  for  their  amusement.'' 
Kor  for  injury  caused  by  the  fall  of  snow  and  ice  from  a 
roof  ov^erhanging  the  sidewalk,*  II^Tor  by  the  fall  of  a 
weight  attached  to  a  flag  suspended  across  the  street.'^ 
But  it  has  been  held  that  where  a  city  permits  a  wooden 
awning  or  roofing  to  be  constructed  over  the  sidewalk, 
it  is  liable  for  an  injury  occasioned  by  a  defect  therein, 
although  it  is  not  apparently  in  bad  repair.^  Kor  is  a 
city  liable  for  injury  done  to  property  by  a  mob,  unless 
it  is  so  specially  provided  by  statute.^  But  when  it  is 
shown  that  the  city  officers  had  actual  knowledge  of  the 
defect,  the  city  is  liable  for  injuries  sustained  by  a  person 
falling  into  a  sewer,  owing  to  the  displacement  of  a  man- 

1  Dill.  Mun.  Corp.,  §  789. 

2  Faulkner  v.  Aurora,  3  Am.  &  Eng.  Corp.  Cas.  520;  Pierce  v.  New- 
Bedford,  129  Mass.  534;  Ray  v.  Manchester,  46  N.  H.  59;  Schultz  v. 
Milwaukee,  49  Wis.  254;  Hutchinson  v.  Concord,  41  Vt.  271;  Steele  v. 
Boston,  128  Mass.  583. 

3  Borough,  etc.  v.  Fitzpatrick,  94  Pa.  St.  121. 

^Norristown  v.  Thayer,  67  Pa.  St.  355;  Hutson  v.  Mayor,  9  N.  Y. 
163:  Davenport  v.  Mayor.  37  N.  Y.  568;  Requa  v.  Rochester,  45  N.  Y. 
120;  Hume  v.  Mayor,  74  N.  Y,  264;  Grove  v.  Ft.  Wayne,  45  Ind.  429; 
House  V.  Montgomery  Co.,  60  Ind.  580;  Drake  v.  Lowell,  13  Met.  292; 
Day  V.  Mitford,  5  Allen,  98;  Merrill  v.  Portland,  4  Clif.  C.  C.  438. 

SHewison  v.  New  Haven,  34  Conn.  136;  Chicago  v.  Fowler,  60  111. 
322. 

6  Dill.  Mun.  Corp.,  §  959,  and  cases  cited;  Louisiana  v.  New  Orleans, 
109  U.  S.  285. 

''  Louisiana  v.  New  Orleans,  supra. 


;§  2U5.]  STREETS,  SEWEKS,  ETC.  273 

hole  cover  in  the  street;^  and  for  injury  to  an  ox  which 
stepped  into  a  hole  in  an  embankment,  when  the  street 
overseer  had  neglected  to  repair  it  or  place  a  warning 
signal  at  its  approach.^ 

§  205.  Instances  of  UahiUtij  for  defective  streets  ami 
sideivallcs. —  It  is  the  duty  of  a  municipal  corporation  not 
only  to  keep  its  streets  and  highways  unobstructed  and 
in  repair,  but  also  to  maintain  its  sidewalks  free  from  ob- 
structions and  defects.^  And  a  city  is  liable  in  damages 
for  an  injury  resulting  from  such  defects,  although  the 
sidewalk  may  not  have  been  constructed  by  authority  of 
the  city.*  For  if  a  municipal  corporation  knowingly  per- 
mits a  way  or  w^alk  constructed  upon  one  of  its  streets  by 
a  private  person,  and  designed  for  the  use  of  pedestrians, 
to  remain  and  be  so  used,  the  authorities  by  their  official 
acts  inciting  and  inducing  such  use,  the  duty  devolves 
upon  the  corporation  to  keep  the  way  in  proper  repair  as 
a  sidewalk.^  The  duty  of  a  city  to  exercise  reasonable 
care  to  keep  its  sidewalks  in  a  safe  condition  does  not  ex- 
tend to  the  removal  of  ice,  which  constitutes  no  other 
effect  than  slipperiness,  there  being  no  such  accumulation 
of  ice  as  to  constitute  an  obstruction  to  travel,  and  no 
ridge  or  inequalities  of  such  height,  or  lying  at  such  in- 
clination or  angle,  as  would  be  likely  to  trip  passengers 

1  Barr  v.  City  of  Kansas,  105  Mo.  550. 

2  Bradford  v.  Mayor,  8  So.  Rep.  683. 

sReinhard  v.  Mayor,  3  Daly  (N.  Y.),  243;  Higert  v.  Greencastle,  43 
Ind.  574;  Furnell  v.  St.  Paul,  20  Minn.  117;  Manchester  v.  Hartford, 
30  Conn.  118;  Hubbard  v.  Concord,  35  N.  H.  52. 

*  Higert  v.  Greencastle,  supra;  Boucher  v.  New  Haven,  40  Conn. 
457. 

5  Graham  v.  Albert  Lea,  50  N.  W.  Rep.  (IVIinn.)  1108:  Estelle  v.  Lake 
Crystal,  27  Minn.  243;  Champaign  v.  Mclnnis,  26  111.  App.  338;  Weare 
V.  Fitchburg,  110  Mass.  334;  Saulsbury  v.  Ithaca,  94  N.  Y.  27;  City  of 
Flora  V.  Nancy,  26  N.  E.  Rep.  645;  Mansfield  v.  Moore,  124  111.  133. 
18 


274  STREETS,  SEWERS,  ETC.  [§  206. 

or  cause  them  to  fall.^  A  municipal  corporation  is  under 
no  obliofation  to  construct  a  street  crossing:  on  the  same 
level  as  the  sidewalk,^  And  it  has  been  held  that  where 
a  sidewalk  was  at  an  elevation  of  four  inches  above  the 
level  of  the  crossing,  it  was  not  such  evidence  of  negli- 
gence in  the  construction  of  the  crossing  as  to  make  the 
corporation  liable  for  injury  to  a  foot  passenger  sustained 
by  striking  her  foot  against  the  curbstone  while  attempt- 
ing to  cross  the  street.' 

§  206.  Notice  to  authorities  required. —  But  a  city  will 
not  be  held  liable,  as  a  general  rule,  for  injuries  from  a 
defective  sidewalk  or  street,  unless  the  authorities  have 
notice  of  the  defect,  or  unless  they  have  notice  of  such 
facts  and  circumstances  as  would,  by  the  exercise  of  rea- 
sonable diligence,  lead  a  prudent  person  to  such  knowl- 
edge.* Actual  notice  to  the  public  authorities  is  not,  in. 
all  cases,  however,  required,  and  it  has  been  held  that 
negligence  may  be  inferred  from  the  omission  by  the  cor- 
poration to  cause  dangerous  obstructions  to  be  removed 
from  the  streets  after  sufficient  time  has  elapsed  to  afford 

iHenckes  v.  Minneapolis,  42  Minn.  530;  Stanton  v,  Springfield,  12 
Allen  (Mass.),  566;  Nason  v.  Boston,  14  Allen  (Mass.),  508;  Stone  v. 
Hubbardston,  100  Mass.  49;  Smyth  v.  Bangor,  72  Me.  249;  Mekellar 
V.  Detroit,  57  Mich.  158;  Taylor  v.  Yonkers,  105  N.  Y.  203;  Chicago  v. 
McGiven,  78  111.  347;  Broburg  v.  Des  Moines,  63  Iowa,  533;  Cook  v. 
Milwaukee,  24  Wis.  270;  Buckley  v.  Prescott,  12  Ont.  App.  637. 

2  Miller  v.  St.  Paul,  38  Minn.  134. 

3  London  v.  Goldsmith,  16  Sup.  Ct.  Can.  Rep.  231. 

*City  of  Chicago  v.  Stearns,  105  111.  554;  Centralia  v.  Ivrouse,  64 
111.  19;  Rapho  V.  Moore,  68  Pa.  St.  404;  Cleveland  v.  St.  Paul,  18  Minn. 
279;  Doulson  v.  Clinton,  33  Iowa,  397;  Mayor  v.  Sheffield,  4  Walk 
(U.  S.)  189;  Portland  v.  Richardson,  54  Me.  46;  Chicago  v.  Robbins, 
2  Black  (U.  S.),  418;  Johnston  v.  Charleston,  3  S.  C.  332;  McGinnity 
V.  New  York,  5  Duer  (N.  Y.),  674;  Griffin  v.  New  York,  9  N.  Y.  456; 
Durant  v.  Palmer,  5  Dutch.  (N.  J.)  544;  Sterling  v.  Thomas,  GO  III 
264;  Jeverin  v.  Eddy,  53  111.  189;  Estelle  v.  Lake  Crystal,  37  Mmn.  243^ 


§  207.]  STREETS,  SEWERS,  ETC.  275 

a  presumption  of  knowledge  of  their  existence  and  an 
opportunity  to  effect  their  removal.^  And  four  hours  has 
been  held  to  be  a  reasonable  time.^ 

§  207.  Sewers —  General  ])oivers  as  to. —  The  authority 
to  construct  sewers  is  a  general  one,  and  resides  in  all  mu- 
nicipal corporations,  unless  expressly  denied  to  them  by 
the  legislature.*  This  authority  is  one  which  may  be 
rightfully  exercised  upon  any  of  the  highways  of  the  mu- 
nicipality, for  it  is  invested  with  exclusive  authority  over 
all  streets  and  highways  within  its  limits.*  Upon  the 
principle  that  a  grant  of  power  carries  with  it,  by  impli- 
cation, the  right  to  use  all  means  and  instrumentalities 
necessary  to  a  beneficial  exercise  of  the  power,  the  grant 
of  a  general  power  to  construct  sewers,  without  any  re- 
striction as  to  the  mode  in  which  they  are  to  be  built  or 
operated,  must  be  construed  with  reference  to  the  sitaa- 
tion  and  requirements  of  the  district  in  which  the  sewers 
are  to  be  constructed,  and  must  be  held  to  confer  author- 
ity to  construct  them  in  such  a  manner  and  with  such  ap- 
pliances as  may  be  necessary  to  render  them  serviceable 
and  effective.^  So,  where  a  system  of  sewerage  of  the  or- 
dinary kind  cannot  be  used  to  advantage  for  want  of  suf- 
ficient fall  to  carry  away  the  contents  of  the  mains  and 
pipes  by  the  force  of  gravitation,  villages  and  other  mu- 
nicipal corporations  under  a  general  grant  of  power  to 

1  Requa  v.  Rochester,  45  N.  Y.  136. 

2  Bradford  v.  Mayor,  8  S.  Rep.  683. 

3  Ft.  Wayne  v.  Coombs,  107  Ind.  75;  Leeds  v.  Richmond,  102  Ind. 
372. 

*  Ft.  Wayne  v.  Coombs,  supra. 

sDrexel  v.  Town  of  Lake,  127  111.  54;  St.  Louis  Bridge  Co.  v.  Peo- 
ple, 135  111.  226;  Cone  v.  Hartford,  28 Conn.  363:  Fishery.  Harnsburg, 
2GrantCas.  (Pa.)291;  Stoudmger  v.  Newark,28N.  J.  Eq.  187;  Glasby 
V.  Morris,  18  N.  J.  Eq.  72;  Trapshagen  v.  Jersey  City,  29  N.  J.  Eq.  206;, 
Michener  v.  Philadelphia,  118  Pa.  St.  535^ 


276  STREETS,  SEWERS,  ETC.  [§  208. 

construct  main  drains  and  sewers,  etc.,  without  any  lim- 
itation or  restriction  as  to  the  mode  in  which  they  shall 
be  built  or  operated,  will  have  the  right  to  construct 
pumping  works,  to  be  used  in  the  working  and  use  of 
sewers.^  But  a  city  council  has  not  the  power,  by  calling 
in  its  ordinance  a  "sewer"  a  "street,"  to  construct  the 
one  under  the  pretense  of  repairing  the  other,  so  as  to  lay  a 
burden  of  taxation,  which  should  have  been  borne  by  the 
public  at  large,  upon  a  few  adjacent  property-holders.^ 

§  208.  Discretion  of  city  in  selecting  setver  system. — The 
duties  of  the  municipal  authorities  in  adopting  a  general 
plan  of  drainage  and  determining  when  and  where  sewers 
shall  be  built,  of  what  size  and  of  what  lavel,  are  of  a 
quasi-indicial  nature,  involving  the  exercise  of  deliberate 
judgment  and  large  discretion  and  depending  upon  con- 
siderations affecting  the  public  health  and  general  con- 
venience throughout  an  extensive  territory;  and  the 
exercise  of  such  judgment  and  discretion  in  the  selection 
and  adoption  of  the  general  plan  or  system  of  drainage  is 
not  subject  to  revision  by  a  court.''     But  the  construc- 

1  Drexel  v.  Town  of  Lake,  127  111.  54. 

2  Clay  V.  Grand  Rapids,  27  N.  W.  Rep.  695. 

3  Johnson  v.  District  of  Columbia,  118  U.  S.  19;  Child  v.  Boston,  4 
Allen  (Mass.),  41;  Mills  v.  Brooklyn.  32  N.  Y.  489;  Radcliflf's  Ex'r  v. 
Mayor,  4  N.  Y.  195;  Franklin  Wharf  Co.  v.  Portland,  67  Me.  46:  Has- 
kell V.  New  Bedford,  108  Mass.  208;  Savannah  v.  Spears,  66  Ga.  304; 
Lynch  v.  New  York,  76  N.  Y.  60. 

In  Mills  V.  Brooklyn,  supra,  the  court  say:  "The  duty  of  draining 
the  streets  and  avenues  of  a  city  or  village  is  one  requiring  the  ex- 
ercise of  deliberation,  judgment  and  discretion.  It  cannot,  in  the 
nature  of  things,  be  so  executed  that  in  every  single  moment  every 
square  foot  of  the  service  shall  be  perfectly  protected  against  the 
consequence  of  water  falling  from  the  clouds  upon  it.  This  duty  is 
not  in  a  technical  sense  a  judicial  one,  for  it  does  not  concern  the 
administi'ation  of  justice  between  citizens;  but  it  is  of  a  judicial 
nature,  for  it  requires,  as  I  have  said,  the  same  qualities  of  delibera- 


§§  209,  210.]  STEEETS,  SEWEES,  ETC.  277 

tion  and  repair  of  sewers  according  to  the  general  plan 
so  adopted  are  simply  ministerial  duties,  and  for  any  neg- 
ligence in  so  constructing  a  sewer,  or  keeping  it  in  repair, 
the  municipality  which  has  constructed  and  owns  the 
sewer  may  be  sued  by  a  person  whose  property  is  thereby 
injured.^ 

§  209.  Duty  to  provide  seiver  outlet. — It  is  the  law  that 
if  a  municipal  corporation  by  its  system  of  construct- 
ing sewers  renders  an  outlet  necessary,  it  must  provide 
one."  The  outlet  is  a  necessary  part  of  the  sewer,  and  if 
the  municipal  corporation  enters  upon  the  work  of  con- 
structing a  sewer  it  assumes  control  over  the  entire  work, 
and  must  construct  and  maintain  it  with  ordinary  care 
and  skill;  This  obligation  extends  to  the  entire  sewer, 
not  merely  to  such  parts  of  it  as  are  on  property  owned 
by  the  city,  and  it  cannot  escape  the  consequences  result- 
ing from  negligence  by  asserting  that  part  of  the  sewer 
was  constructed  on  private  property.'' 

§  210.  City  not  insurer  of  condition  of  sewer. —  A  mu- 
nicipal corporation  is  not  an  insurer  of  the  condition  of 
its  sewers,  but  it  is  bound  to  use  ordinary  care  and  skill 
in  constructing  and  maintaining  them,  and  for  a  failure 
so  to  do  is  responsible  to  a  citizen  who  suffers  loss  from 

tion  and  judgment.  It  admits  of  a  choice  of  means,  and  the  deter- 
mination of  the  order  of  time  in  which  improvements  shall  be  made. 
It  involves,  also,  a  variety  of  prudential  circumstances  relating  to 
the  burdens  which  may  be  discreetly  imposed  at  a  given  time,  and 
the  preference  which  one  locality  may  claim  over  another." 

1  Johnson  v.  District  of  Columbia,  supra. 

2  City  of  Evansville  v.  Decker,  84  Ind.  325;  Crawfordsville  v.  Bond, 
96  Ind.  236;  Van  Pelt  v.  Davenport,  42  Iowa,  308;  Byrnes  v.  Cohoes, 
67  N.  Y.  204. 

3 Ft.  "Wayne  v.  Coombs,  107  Ind.  75;  Commissioners  v.  City,  79 
Ind.  491;  Angell  on  Highways,  §  216;  Dill.  Mun.  Corp.,  g§  656,  688. 


278  STKEETSj  SEWEKS,  ETC.  [§  211. 

such  negligence.  This  care  and  skill  requires  the  mu- 
nicipality to  take  notice  of  the  liability  of  timbers  to 
decay  from  time  and  use,  and  to  take  such  measures  as 
ordinary  care  and  skill  dictate  to  guard  against  a  sewer 
becoming  unsafe  because  of  the  decay  of  the  materials 
used  in  its  construction.^ 

§  211.  LiahiJity  for  injuries  from  defective  sewer. — 
Thoug-h  a  sewer  is  constructed  with  care  and  skill,  a  mu- 
nicipal  corporation  is  liable  for  injuries  for  negligently  fail- 
ing to  keep  it  in  repair,  and  where  it  is  suffered  to  remain 
out  of  repair  for  such  a  length  of  time  as  that  it  was  the 
duty  of  the  corporate  authority  to  take  notice  of  its  condi- 
tion, the  law  will  charge  the  corporate  officers  with  notice 
of  its  condition."  And  though  a  city  is  not  responsible  be- 
cause of  any  failure  to  provide  proper  sewerage,  yet  if 
the  effect  of  the  construction  of  one  of  its  public  works 
shall  be  to  collect  water  and  cast  it  upon  the  land  of  an 
individual  where  it  would  not  overflow,  the  city  is  lia- 
ble.' And  where  the  property  of  private  persons  is 
flooded,  either  directly  by  water  being  set  back,  when 
this  is  the  result  of  the  negligent  execution  of  the  plan 

1  Indianapolis  v.  Scott,  72  Ind.  196;  Board  of  Com'rs  v.  Legg,  93 
Ind.  523;  Indiana  Car  Co.  v.  Parker,  100  Ind.  181;  Rapho  v.  Moore, 
68  Pa.  St.  404;  Norristown  v.  Thayer,  67  Pa.  St.  335;  Todd  v.  Troy, 
€1  N.  Y.  506. 

2  Fort  Wayne  v.  Coombs,  107  Ind.  75;  City  of  Madison  v.  Baker, 
103  Ind.  41;  Dill.  Mun.  Corp.,  §  1025. 

SBuford  V.  Grand  Rapids,  53  Mich.  98;  Ashley  v.  Port  Huron,  35 
Mich.  296;  Dixon  v.  Baker,  65  111.  518;  Weis  v,  Madison,  75  Ind.  241; 
Indianapolis  v.  Tate,  39  Ind.  282;  Ross  v.  Clinton,  46  Iowa,  606;  Van 
Pelt  V.  Davenport,  42  Iowa,  308;  Wilson  v.  New  Bedford,  108  Mass. 
261;  O'Brien  v.  St.  Paul,  25  Minn.  333;  Thurston  v.  St.  Joseph,  51 
Mo.  510;  Byrnes  v.  Cohoes,  67  N.  Y.  204;  Rhodes  v.  Cleveland,  10 
Ohio,  159;  Inman  v.  Tripp,  11  R.  I.  520;  Gillison  v.  Charleston,  16 
W.  Va.  282. 


§  212.]  STREETS,  SEWERS,  ETC.  279 

adopted  for  the  construction  of  sewers,  or  of  the  neg- 
ligent failure  to  keep  the  same  in  repair  and  free  from 
obstructions,  the  municipality  is  liable,  and  this  whether 
the  land  injured  is  below  grade  of  street  or  not.^  And 
it  has  been  held  that  if  a  city  constructs  a  sewer  in 
such  a  manner  that  an  additional  flow  of  surface  water 
into  a  lot  is  caused  thereby,  in  other  words,  if  the  sewer 
gathered  other  than  surface  water,  the  owner  of  such  lot 
may  recover  such  damages  as  may  have  been  caused  by 
such  increased  flow.^ 

§  212.  Power  to  abate  nuisances. —  The  power  to  abate 
nuisances  is  a  portion  of  police  authority  necessarily 
vested  in  all  municipal  corporations  and  populous  towns; 
and  the  legislature  may  invest  a  municipal  corporation 
with  power  to  abate  nuisances  summarily,  without  re- 
quiring resort  to  legal  proceedings.^  The  power  so  con- 
ferred is  for  the  public  good  and  not  for  any  private  ad- 
vantage, and  for  failure  of  its  officers  to  properly  exercise 
the  power  the  municipality  is  not  liable.^  But,  in  the 
absence  of  authority,  neither  the  board  of  health  nor  the 
city  council  of  a  city  has  any  power  to  erect  a  dam  on  a 
person's  land  without  his  consent  for  the  purpose  of  abat- 
ing a  nuisance  existing  on  adjacent  land.^  But  where  a 
municipal  corporation,  however,  is  authorized  by  its  char- 
ter or  general  laws  to  remove  and  prevent  nuisances, 

1  Hutchins  Bros.  v.  Mayor  of  Hurlburg,  20  Am.  &  Eng.  Corp.  Cas. 
(Md.,  1887)  400;  Lynch  v.  Mayor,  76  N.  Y.  60;  O'Brien  v.  St.  Paul,  25 
Minn.  333;  Inhabs.  W.  Orange  v.  Field,  37  N.  J.  Eq.  600;  Ashley  v. 
Port  Huron,  35  Mich.  296. 

2  Arn  V.  City  of  Kansas,  4  McCrary  (U.  S.),  558. 
3Baumgartner  v.  Hasty,  100  Ind.  575;  King  v.  Davenport,  98  111. 

305;  Kennedy  v.  Phelps,  10  La.  Ann.  227;  Dill.  Mun.  Corp.,  §  374. 

*  Armstrong  v.  Brunswick,  79  Mo.  319. 

*  Cavanagh  v.  Boston,  1 39  Mass.  426. 


280  STREETS,  SEWERS,  ETC.  [§  213^ 

the  only  restriction  upon  that  right  is  that  what  is  done 
shall  clearly  be  done  for  the  public  health,  safety  and 
convenience.^  The  mere  declaration  by  the  city  coun- 
cil that  a  certain  structure  is  an  encroachment  or  ob- 
struction does  not  make  it  so,  nor  can  such  declaration 
make  it  a  nuisance  unless  in  fact  it  has  that  character. 
That  which  is  authorized  by  legislative  authority  cannot 
be  declared  a  nuisance  by  a  city  corporation.  "  It  is  a 
doctrine  not  to  be  tolerated  in  this  country  that  a  mu- 
nicipal corporation,  without  any  general  laws  either  of 
the  city  or  of  the  state  within  which  a  given  structure 
can  be  shown  to  be  a  nuisance,  can,  by  the  mere  declara- 
tion that  it  is  one,  subject  it  to  removal  by  any  person 
supposed  to  be  aggrieved,  or  even  by  the  city  itself.  This 
would  place  every  house,  every  business  and  all  the  prop- 
erty in  the  city  at  the  uncontrolled  will  of  the  temporary- 
local  authorities."  * 

§  213.  Lidbility  as  to  nuisances. —  It  is  the  duty  of  a 
municipal  corporation  to  provide  wholesome  laws  within 
its  sphere  for  the  protection  of  the  persons  and  property 
of  its  citzens,  but  it  cannot  guaranty  them  against  the 

1  Dubuque  v.  Maloney,  9  Iowa,  450;  Commissioners  v.  Worcester, 
3  Pick.  (Mass.)  463;  Roberts  v.  Ogle,  30  111.  459;  Commissioners  v.  Gas 
Co.,  13  Pa.  St.  318;  Salem  v.  Railroad  Co.,  93  Mass.  431;  Dingley  v. 
Boston,  100  Mass.  544;  Lake  View  v.  Letz,  44  111.  81;  Commissioners 
V.  Goodrich,  13  Allen  (Mass.),  546;  Whyte  v.  Mayor,  3  Swan  (Tenn.), 
364;  People  v.  Albany,  11  Wend.  (N.  Y.)  539;  St.  Paul  v.  Coulter,  13 
Minn.  51;  Williams  v.  Augusta,  4  Ga.  509;  St.  Louis  v.  Bentz,  11  Mo. 
611;  Collins  v.  Hatch,  18  Ohio,  533;  New  Orleans  v.  Phillipi,  9  La, 
Ann.  44;  Peck  v.  Lockwood,  5  Day,  33;  Taylor  v.  Carondelet,  33  Mo. 
105;  Phillips  V.  Allen,  41  Pa.  St.  481;  Mobile  v.  Yuelle,  3  Ala.  137; 
Baltimore  v.  Radecke,  49  Md.  317. 

2  Yates  V.  Milwaukee,  10  Wall.  (U.  S.)  497;  Pieri  v.  Shieldsboro,  42 
Miss.  893;  Underwood  y.  Green,  42  N.  Y.  140;  Darst  v.  People,  50  IlL 
286;  Miller  v.  Burch,  33  Tex.  209;  Everett  v.  Council  Bluffs,  46  Iowa,. 
66;  Rye  v.  Paterson,  45  Tex.  313;  Chicago  v.  Laflin,  49  111.  172. 


§  213.]  STREETS,  SEWEKSj  ETC.  281 

infringement  of  such  laws.^  Accordingly,  a  municipal 
corporation  is  not  liable  in  damages  for  a  failure  to  abate 
a  nuisance  existing  upon  private  property  when  not  cre- 
ated by  its  agents,  though  such  nuisance  exists  in  viola- 
tion of  its  ordinances.^  ITor  is  a  town  liable  for  an  act 
which  results  in  creating  a  nuisance  to  the  property  of 
one  of  its  citizens,  when  the  act  complained  of  is  not 
within  the  scope  of  its  corporate  powers.' 

1  Levy  V.  Mayor,  1  Sandf.  (N.  Y.)  465. 

2  Kansas  City  v.  Kiley,  13  Am.  &  Eng.  Corp.  Cas.  (Mo.,  1885)  446; 
Davis  V.  Montgomery,  51  Ala.  139;  Levy  v.  New  York,  1  Sandf.  (N.  Y.) 
465;  Heurson  v.  New  Haven,  37  Conn.  475;  Armstrong  v.  Brunswick, 
79  Mo.  319. 

3Seele  v.  Deering  (Me.),  10  Atl.  Rep.  45. 

In  Seele  v.  Deering,  supra,  which  was  an  action  for  damages  for 
injuries  to  plaintiff's  mill-pond,  caused  by  the  highway  surveyor  of 
the  defendant  town  digging  a  ditch  which  turned  the  drainage 
from  a  tripe  factory  into  the  pond,  thereby  rendering  the  water 
unfit  for  use,  the  court  say: 

"  To  create  a  liability  on  the  part  of  the  town  not  connected  with 
its  private  advantage,  the  act  complained  of  must  be  within  the 
scope  of  its  corporate  powers  as  defined  by  statute.  If  the  partic- 
ular act  relied  on  as  the  cause  of  action  be  wholly  outside  the  gen- 
eral powers  conferred  on  towns,  they  can  in  no  event  be  liable  there- 
for, whether  the  performance  of  the  act  be  expressly  directed  by  a 
majority  vote,  or  was  subsequently  ratified.    .    .    . 

"  It  is  quite  evident  that  a  town,  independent'  of  any  statutory 
authority,  has  no  corporate  authority  to  dig  ditches  across  another's 
land.  Such  an  act  is  ultra  vires;  and  any  express  majority  vote, 
based  on  a  proper  article  in  a  warrant  calling  a  meeting  of  the  de- 
fendants, directing  such  acts,  would  create  no  liability  on  the  part 
of  the  town.  Cushing  v.  Bedford,  125  Mass.  526;  Lemon  v.  Newton, 
134  Mass.  476." 

See,  also,  Morrison  v.  Lawrence,  98  Mass.  219;  Brown  v.  Vinal- 
haven,  65  Me.  403;  Small  v.  Danville,  51  Me.  359;  Woodcock  v.  Ca- 
lais, 66  Me.  234;  Anthony  v.  Adams,  1  Met.  (Mass.)  284;  Estes  v. 
China,  56  Me.  407;  Franklin  Wharf  Co.  v.  Portland,  67  Me.  46;  Pro- 
prietors, etc.  V.  Lowell,  7  Gray  (Mass.),  223. 


282  STREETS,  SEWERS,  ETC.  [§  21-i. 

§214.  Towers  as  to  quarantine  regulations. —  It  has 
been  held  that  a  town  organized  under  general  laws  with 
the  usual  and  ordinary  powers  has  no  power  to  establish 
a  quarantine  against  property  and  persons,  and  a  con- 
tract for  services  to  be  rendered  in  connection  therewith 
is  ultra  vires  and  void.^  In  JVew  Decatur  v.  Berry^  supra^ 
the  court  say :  "  How  the  power  to  prohibit  persons  from 
coining  into  the  town  under  any  circumstances  can  in 
any  just  sense  be  said  to  be  incident  to  any  one  of  the 
powers  enumerated,  we  are  unable  to  see.  Every  power 
•conferred  may  be  fully  exercised  and  effected  without  the 
•exercise  of  the  power  here  claimed.  Xo  power  conferred 
would  in  the  slightest  degree  be  aided  by  the  exercise  of 
the  power  claimed  here.  The  powder  claimed  is  not  ex- 
pressly granted;  it  is  not  implied  in  or  incident  to  any 
power  granted ;  it  is  not  essential  to  the  declared  objects 
and  purposes  of  the  corporation ;  it  does  not  exist.  The 
employment  of  the  appellee  by  the  corporate  authorities 
as  '  chief  of  the  quarantine  guard  '  cannot  find  justifica- 
tion or  authorization  under  the  power  'to  establish  night 
and  day  watches  and  patrols,  and  to  appoint  captains 
thereof.'  The  watches  and  patrols  thus  provided  for  are 
for  the  ordinary  police  of  the  town,  charged  with  the 
conservation  of  the  peace  and  good  order  and  the  en- 
forcement of  authorized  ordinances  of  the  municipal  gov- 
ernment. None  of  these  duties  were  to  be  performed  by 
the  alleged  quarantine  guard,  or  the  appellee  as  chief  of 
that  guard.  He  was  employed,  if  at  all,  solely  for  the 
purpose  of  discharging  functions  with  which  the  munici- 
pality had  no  power  to  clothe  him,  and  rendering  serv- 
ices which  were  not  in  furtherance  of  any  municipal  ob- 
ject or  purpose." 

i  New  Decatur  v.  Berry,  90  Ala.  433;  DilL  Mun.  Corp.,  §§  89,  463-465. 


§  215.]  STREETS,  SEWEESj  ETC.  283 

§  215.  Powers  as  to  puhlic  wharves. —  In  the  absence 
of  any  special  statutory  authority  a  city  has  no  power  to 
lease  a  public  wharf  to  private  persons.  When  it  under 
takes  to  confer  on  a  private  individual  such  a  right  in 
streets  or  wharves  as  will  produce  a  conflict  between  the 
public  and  the  private  use,  the  act  is  ultra  vires}  So  an 
ordinance  giving  to  private  persons  the  right  to  occupy  a 
portion  of  the  public  wharf  with  a  grain  elevator  for  fifty 
years,  without  reserving  the  right  to  resume  possession 
and  regulate  the  charges,  is  void.^  The  use  and  control 
of  public  highways,  such  as  streets  and  wharves,  belong- 
ing to  the  city,  cannot  be  surrendered  by  contract  to  a 
private  individual  to  the  exclusion  of  the  public.  Such 
highways  are  public  property,  intended  for  public  use, 
and  placed  under  the  control  of  the  city  government  for 
the  benefit  of  the  public;  and  any  other  disposition  of 
such  property,  without  special  authority  conferred  by  the 
law-making  power,  must  be  disregarded,^  It  is  a  doctrine 
which  has  often  been  decided  and  is  settled  law  that  a 
municipal  corporation  must  at  all  times  retain  the  full 
possession  of  its  legislative  powers  so  as  at  all  times  to  be 
able  to  discharge  its  public  duties.* 

iBateman  v.  Covington,  14  S.  W.  Rep.  361  (Ky.,  1890);  City  of 
Louisville  v.  Bank,  3  B.  Mon.  (Ky.)  138;  Dill.  Mun.  Corp.,  §§  659-661. 

2  Illinois  Canal  Co.  v.  St.  Louis,  2  Dill,  C.  C.  70. 

3  Bateman  v.  Covington,  supra. 

4  Gale  v.  Kalamazoo,  23  Mich.  344;  People's  R.  R.  v.  Memphis  R.  R., 
10  Wall.  (U.  S.)  38,50;  Louisville  Ry.  v.  Louisville, 8  Bush  (Ky.),  415; 
Brooklyn  v.  City  R.  R.,  47  N.  Y.  475;  Milhan  v.  Sliarp,  27  N.  Y.  611; 
Presbyterian  Church  v.  Mayor,  etc.,  5  Cow.  (N.  Y.)  538;  Smith  v. 
Morse,  2  Cal.  524;  Stuyvesant  v.  Mayor,  7  Cow.  (N.  Y.)  588;  Saving 
Fund  V.  Philadelphia,  31  Pa.  St.  175;  Ex  parte  Mayor,  etc.,  23  Wend. 
(N.  Y.)  277;  Railroad  Co.  v.  Mayor,  1  Hill  (N.  Y.),  362;  Martin  v. 
Mayor,  1  Hill  (N.  Y.),  545;  Bryson  v.  Philadelphia,  47  Pa.  St.  329; 
Dingman  v.  People,  51  111.  277;  Brimmer  v.  Boston,  102  Mass.  19; 
Johnson  v.  Philadelphia,  60  Pa.  St.  445;  State  v.  Gas  Co.,  18  Ohio  St. 


284  STREETS,  SEWERS,  ETC.  [§  216, 

§  216.  Exclusive  privileges  as  to  gas  and  water  supiily. 

It  is  perfectly  competent,  of  course,  for  the  legislature  to 
confer  upon  an  individual  or  a  private  corporation  the 
exclusive  right  to  furnish  gas  or  water  supply  to  the  in- 
habitants of  a  city,  and  to  erect  works  and  lay  pipes  there- 
for within  the  limits  of  a  municipal  corporation.^  But  a 
municipal  corporation  has  no  power  to  grant  such  exclu- 
sive privileges  without  express  authority  conferred  by 
charter  so  to  do.  JSTo  such  authority  can  be  derived  by 
implication.^ 

262;  Jackson  v.  Bowman,  39  Miss.  671;  Oakland  v.  Carpentier,  13 
Cal.  540;  Bateman  v.  Covington,  14  S.  W.  Rep.  361. 

In  Bateman  v.  Covington,  supra,  the  court  say:  "We  perceive  no 
authority  in  the  city  charter  or  any  legislative  enactment  empower- 
ing the  city  to  make  such  a  contract,  or  to  deprive  the  public  of  its 
use.  The  city  has  the  power  to  impose  certain  duties  upon  those 
availing  themselves  of  wharf  privileges,  and  to  make  such  regula- 
tions as  may  be  necessary  to  keep  the  wharf  in  repair  for  public  use; 
but  it  has  no  power  to  confer  absolute  control  to  an  individual  who 
leases  it  for  his  own  private  use.  The  city  must  control  the  use,  and 
for  this  purpose  may  place  the  ground  in  charge  of  a  wharf-master, 
or  some  agent  who  acts  for  the  city,  that  the  public  may  enjoy  the 
use.  A  city  has  the  exclusive  control  of  its  streets,  and  a  like  con- 
trol over  its  wharves;  and  in  appropriating  the  use  of  either  for  the 
benefit  of  a  private  person,  to  the  exclusion  of  the  public,  it  is  going 
beyond  its  power,  and  such  a  contract  is  void.  The  city  is  a  mere 
trustee  for  the  public,  and  all  have  the  right  to  use  streets  and 
wharves,  one  citizen  having  the  same  right  as  another." 

1  State  v.  Milwaukee  Gaslight  Co..  29  Wis.  454;  New  Orleans  Gas- 
light Co.  V.  Louisiana  Light  Co.,  115  U.  S.  650:  New  Oi-leans  Water 
Co.  V.  Rivers.  115  U.  S.  674;  St.  Tamany  Water  Works  v.  New  Orleans 
Water  Works,  120  U.  S.  64;  Crescent  City  Gaslight  Co.  v.  New  Or- 
leans Gaslight  Co.,  27  La.  Ann.  188;  Hovelman  v.  Kansas  City,  etc. 
Co.,  79  Mo.  632:  Memphis  v.  Water  Co.,  5  Heisk.  (N.  J.)  495;  Broad- 
way Co.  V.  Hankey,  31  Md.  346;  Atlantic  City  Water  Works  v.  At- 
lantic City,  48  N.  J.  L.  378:  Citizens'  Water  Co.  v.  Hydraulic  Co.,  50 
Conn.  1;  Lehigh  Water  Co.'s  Appeal,  102  Pa.  St.  515;  Louisville  v. 
Weible,  84  Ky.  290. 

-  Tuckahoe  Canal  Co.  v.  Railroad  Co.,  11  Leigh,  42;  Gaines  v.  Coates^ 


;§§  217,  218.]  STREETS,  SEWERS,  ETC.  2S5 

§  217.  Contracts  as  to  gas  or  water  siqjply. —  Under  a 
general  antliority  to  make  all  contracts  necessary  for  its 
welfare,  a  city  has  the  implied  power  to  make  contracts 
for  water  or  gas  supply.^  And  Laving  the  power  to  make 
a  contract  touching  the  matter,  it  may  make  it  according 
to  its  own  discretion  as  to  its  prudence  or  good  policy, 
within  the  limits  of  its  franchise.-  And  where  the  charter 
■of  the  city  provides  that  the  city  may  establish  water- 
works or  contract  for  the  furnishing  of  water  for  the  city, 
it  has  the  power  to  make  a  contract  with  a  water  com- 
pany to  furnish  water  for  the  city  upon  payment  of  a 
monthly  rental  therefor ;  ^  or  it  may  receive  its  w^ater 
supply  by  leasing  its  own  water-works  to  another  com- 
pany for  that  purpose.* 

§  218.  Power  to  regulate  water,  gas  and  telepJione  rates. 
Municipalities  may,  under  delegated  legislative  authority, 
regulate  the  rates  at  which  water  or  gas  supply  may  be 
furnished  or  telephone  service  enjoyed.*  But  the  power 
of  regulating  rates  is  not  a  power  of  confiscation,  or  to 

51  Miss.  235;  Mohawk  Bridge  Co.  v.  Railroad  Co.,  6  Paige  (N.  Y.),  554; 
State  V.  Cincinnati  Gas  Co..  18  Ohio  St.  262;  Norwich  Gas  Co.  v.  City 
Gas  Co.,  25  Conn.  20;  East  St.  Louis  v.  Gas  Co.,  98  111.  415;  Des  Moines 
Gas  Co.  V.  Des  Moines,  44  Iowa.  505;  Gas  Co.  v.  Light  Co.,  115  U.  S. 
659;  Gaslight  Co.  v.  Saginaw,  28  Fed.  Rep.  529;  Gas  Co.  v.  Middleton, 
59  N.  Y.  228;  Parkersburg  Gas  Co.  v.  Parkersburg,  4  S.  E.  Rep.  (W. 
Va.,  1887)  650;  Citizens'  Gas  Co.  v.  El  wood.  114  Ind.  332. 

1  Cabot  V.  Rome,  28  Ga.  50;  Wells  v.  Atlanta,  43  Ga.  67;  Atlantic 
City  Water  Works  v.  Atlantic  City,  39  N.  J.  Eq.  367;  McKnight  v. 
New  Orleans,  24  La.  Ann.  412;  Grant  v.  Davenport,  36  Iowa,  396; 
Hale  V.  Houghton,  8  Mich.  458. 

2  Indianapolis  v.  Gaslight  Co.,  66  Ind.  396. 

3  Capitol  City  Water  Co.  v.  Montgomery,  9  S.  Rep.  343. 
*  Los  Angeles  Water  Co.  v.  Los  Angeles,  55  Cal.  178. 

s  State  V.  Gas  Co.,  18  Ohio  St.  262;  Norwich  Gaslight  Co.  v.  Gas 
Co.,  25  Conn.  19:  State  v.  Gaslight  Co.,  29  Wis.  452;  Spring  Valley 
Water  Works  v.  San  Francisco,  82  Cal.  286. 


286  STREETS,  SEWEKS,  ETC.  [§  219. 

take  the  propert}''  of  a  company  without  just  compensa- 
tion. The  municipal  authorities  have  no  right  to  fix  rates 
arbitrarily  without  investigation,  or  without  the  exercise 
of  judgment  and  discretion  in  determining  what  is  a  fair 
and  reasonable  compensation,^  And  where  a  city  ordi- 
nance granting  a  franchise  to  a  gas  company  and  accepted 
by  the  gas  company  fixes  the  maximum  price  of  gas,  the 
city  cannot  subsequently  reduce  such  price.^  An  ordi- 
nance of  a  city  regulating  water  rates  is  not  invalid  be- 
cause it  fixes  different  rates  for  the  consumers  of  the  same 
class;  one  section  providing  that  when  there  is  a  large 
consumption  of  waste  water  the  company  may  apply  a 
meter  and  collect  a  certain  amount  for  certain  quantities 
of  water  used,  although  another  section  of  the  ordinance 
fixes  certain  specific  rates  for  the  use  of  water  according 
to  the  size  of  the  house.^ 

§  219.  LiaMlUy  for  damages  owing  to  inadequate  water 
supply. —  It  is  the  general  rule  that,  in  the  absence  of  an 
express  statute  so  declaring,  municipalities  are  not  liable 
to  actions  for  injuries  occasioned  by  reason  of  negligence 
in  using  or  keeping  in  repair  the  fire-engines  owned  by 
them,  or  furnishing  them  with  an  inadequate  supply  of 
water.*    So  a  city  making  a  contract  with  a  water  com- 

1  Spring  Valley  Water  Works  v.  San  Francisco,  82  Cal.  286;  State 
V.  Gas  Co.,  18  Ohio  St.  262. 

2  State  V.  Gas  Light  Co.,  102  Mo.  472. 

3Sheward  v.  Citizens'  Water  Co.,  90  Cal.  635;  Shiras  v.  Ewing,  20 
Pac.  Rep.  320. 

*  Black  V.  Columbia,  19  S.  C.  415;  Wheeler  v.  Cincinnati,  19  Ohio 
St.  19;  Eastman  v.  Meredith,  36  N.  H.  284;  Bigelow  v.  Randolph,  14 
Gray  (Mass.),  541;  Haflford  v.  New  Bedford,  16  Gray  (Mass.),  297; 
Jewett  V.  New  Haven,  38  Conn.,  368;  Og  v.  Lansing,  35  Iowa,  495; 
Elliott  V.  Philadelphia,  75  Pa.  St.  347;  O'Meara  v.  Mayor,  1  Daly 
(N.  Y.).  425;  Smith  v.  Rochester,  76  N.  H.  506;  Howard  v.  San  Fran- 
cisco, 51  Cal.  52;  Maximilian  v.  Mayor,  62  N.  Y.  160;  Greenwood  v. 


§  220.]  STREETS,  SEWERS,  ETC.  287 

pany  to  furnish  water  for  fires  is  not  liable  to  its  citizens 
or  residents  on  account  of  the  failure  of  the  compan}'-  to 
furnish  water  or  to  perform  the  conditions  of  the  con- 
tract. The  contract  in  such  case  is  between  the  city  and 
the  water  company.^  'Nor  is  a  city  liable,  it  has  been 
held,  for  its  neglect  in  cutting  water  off  from  a  hydrant,^ 
but  for  which  the  fire  might  have  been  extinguished.^ 

§  220.  The  doctrine  of  respondeat  superior. —  The  rule 
respondeat  superior,  though  well  recognized  in  fixing  the 
liabilities  of  private  corporations  and  natural  persons,  has 
been  the  source  of  much  doubt  and  perplexity  in  its  ap- 
plication to  municipal  corporations.  It  is  now  well  set- 
tled, however,  that  such  corporations,  when  acting  in  a 
certain  capacity,  are  liable  as  superiors  and  employers 
for  injuries  to  third  persons  resulting  from  the  negligence 
and  unskilfulness  of  their  agents  or  servants  while  in  the 
line  of  their  employment.'    And  it  has  been  said  that 

Louisville,  13  Bush  (Ky.),  236;  Pollock  v.  Louisville,  18  Bush  (Ky.), 
221;  Fisher  v.  Boston,  104  Mass.  87;  Hayes  v.  Oshkosh,  33  Wis.  314; 
Heller  v.  Sedalia,  53  Mo.  159;  Bishmeyer  v.  Evansville,  29  Ind.  187; 
Western  College  of  Medicine  v.  Cleveland,  12  Ohio  St.  375;  Grant  v. 
Erie,  69  Pa.  St.  420;  New  Orleans  v.  Crescent  City  Ins.  Co.,  25  La. 
Ann.  390;  Davis  v.  Montgomery,  51  Ala.  139;  Hill  v.  Boston,  122 
Mass.  324;  Tainter  v.  Worcester,  123  Mass.  311;  Foster  v.  Lookout 
Water  Co.,  8  Lea  (Tenn.),  42;  Wright  v.  Augusta,  78  Ga.  241;  Van 
Horn  V.  Des  Moines,  4  Am.  &  Eng.  Corp.  Cas.  339. 

1  Becker  v.  Keokuk  Water  Works,  79  Iowa,  419;  Davis  v.  Clinton 
Water  Works,  54  Iowa,  59;  Van  Horn  v.  Des  Moines,  63  Iowa,  447; 
Nickerson  v.  Bridgeport  Hydraulic  Co.,  46  Conn.  24;  Fowler  v.  Ath- 
ens City  Water  Works.  83  Ga.  219;  Vrooman  v.  Turner,  69  N.  Y.  280; 
Weet  V.  Brockport,  16  N.  Y.  161;  Marvin  Safe  Co.  v.  Ward,  46  N.  J. 
L.  19;  Exchange  Bank  v.  Rice,  107  Mass.  37. 

2  Tainter  V.  Worcester,  128  Mass.  311;  New  Orleans  v.  Insurance 
Co.,  25  La,  Ann.  390;  Wheeler  v.  Cincinnati,  19  Ohio  St.  19. 

3  Toledo  V.  Cone,  41  Ohio  St.  149;  Dill.  Mun.  Corp.,  ^  974;  Barnes 
V.  District  of  Columbia,  91  U.  S.  540;  Rowell  v.  Williams,  29  Iowa, 


288  STREETS,  SEWERS,  ETC.  [§  220. 

under  analogous  conditions  there  seems  to  be  no  founda- 
tion in  reason  or  public  policy  for  exempting  such  public 
corporations  any  more  than  private  individuals  from  lia- 
bility for  injuries  inflicted  on  others  through  the  negli- 
gence of  their  agents.^ 

210;  Powers  v.  Council  Bluffs,  50  Iowa,  97;  Eussell  v.  Mayor,  etc., 
2  Denio  (N.  Y.),  461;  Tone  v.  Mayor,  etc.,  70  N.  Y.  157,  id.  459; 
Campbell  v.  Montgomery,  53  Ala.  537. 

1  Toledo  V.  Cone,  supra. 

In  Toledo  v.  Cone,  supra,  the  court  say: 

"While  they  (municipal  corporations)  act  in  a  public  character 
or  capacity  and  exercise  public  powers,  they  may  and  do  also  act  in 
a  private  capacity,  like  private  corporations,  and  as  such  are  held 
to  a  like  responsibility.  Thus,  if  a  municipal  corporation  acquires 
real  or  personal  property,  and  in  the  discharge  of  what  may  be 
deemed  ministerial  duties  in  respect  to  the  same  an  individual 
receives  injury  through  the  negligence  of  its  olScers  or  servants,  it 
should  be  held  responsible  to  that  individual.  Though  not  liable 
for  a  defect  of  judgment  or  discretion  while  acting  as  a  state  in- 
strumentality in  the  exercise  of  legislative  functions,  yet,  having 
like  a  private  corporation  or  natural  person  become  the  owner  or 
obtained  the  control  of  property,  it  should  not  be  relieved  from  the 
operation  of  the  general  maxim  that  one  should  so  use  his  own  as 
not  to  interfere  with  that  which  belongs  to  another.  Thus,  if  a  city 
neglects  its  ministerial  duty  to  cause  its  sewers  to  be  kept  free  from 
obstructions,  to  the  injury  of  a  person  who  has  an  interest  in  the 
performance  of  that  duty,  it  is  liable  to  an  action  for  the  damages 
thereby  occasioned.  Emery  v.  Lowell,  104  Mass.  13.  So,  if  a  city 
owns  a  wharf  and  has  the  exclusive  control  of  it  and  receives 
wharfage  or  profit  for  the  use  thereof,  it  will  be  held  liable  to  a  pri- 
vate action  for  an  injury  suffered  by  an  individual  by  reason  of  a 
defect  in  the  structure.  Pittsburg  v.  Grier,  23  Pa.  St.  54.  And  the 
same  rule  applies  in  respect  to  a  city's  failure  to  keep  its  streets 
in  a  safe  condition  for  public  use,  where  this  is  a  duty  resting 
upon  it. 

"  Of  course,  before  a  municipal  corporation  is  subjected  to  liabil- 
ity for  the  misfeasance  or  neglect  of  its  agents  or  servants,  it  be- 
comes material  and  sometimes  difficult  to  determine  whether  they 
are  in  fact  the  agents  or  servants  of  the  corporation.  It  is  said  by 
an  approved  text-writer  that  if  the  municipal  corporation  appoints 


§  221.]  STREETS,  SEWERS,  ETC.  289 

§  221.  Distinction  ietiveen  imMic  quasi-corporations 
•and  municipal  corporations. —  The  authorities  establish- 
ing the  doctrine  that  a  city  is  responsible  for  its  mere 
negligence  are  so  numerous  that  the  law  must  be  deemed 
to  be  settled  in  accordance  therewith.^  A  distinction 
must  be  noted,  however,  between  the  liability  of  a  munic- 
ipal corporation  made  such  by  acceptance  of  a  charter, 
and  the  involuntary  ^^i^asx-corporations  known  as  counties, 
towns,  school  districts,  and  especially  the  townships  of 
[N'ew  England.    The  liability  of  the  former  is  greater  than 

or  elects  them  and  can  control  them  in  the  discharge  of  their  duties, 
can  continue  or  remove  them,  can  hold  them  responsible  for  the 
manner  in  which  they  discharge  their  trust;  and  if  those  duties  re- 
late to  the  exercise  of  corporate  powers  and  are  for  the  peculiar 
benefit  of  the  corporation  in  its  local  or  special  interest,  they  must 
justly  be  regarded  as  its  agents  or  servants,  and  the  corporation 
will  be  held  responsible  for  their  acts  within  the  scope  of  their  em- 
ployment. And  in  broad  terms  to  the  same  effect,  it  is  laid  down 
in  Wood  oh  Master  and  Servant,  section  459,  that  if  an  independent 
public  officer,  or  some  one  whose  duties  are  defined  or  specified  by 
law,  is  in  any  measure  subject  to  the  discretion  or  control  of  a  mu- 
nicipal corporation,  and  acts  in  obedience  to  its  instructions,  the 
relation  of  master  and  servant  exists  and  the  rule  of  respondeat 
superior  applies.  The  rule  is  predicated  upon  the  right  of  the  em- 
ployer to  discharge  and  control  the  servant.  Blake  v.  Ferris,  5 
N.  Y.  48." 

1  Barnes  v.  District  of  Columbia,  91  U.  S.  551;  Mayor  v.  Henley,  2  CI. 
«fe  Fin.  331;  Mersey  Docks  v.  Gibbs,  1  H.  L.  Cas.  93;  Canal  Co.  v.  Par- 
•nably,  11  Ad.  &  Ell.  223;  Scott  v.  Mayor,  37  Eng.  L.  &  Eq.  465;  Weigh^ 
man  v.  Washington,  1  Bl.  39;  Nebraska  v.  Campbell,  2  Bl.  590;  Rob- 
bins  V.  Chicago,  4  Wall.  (U.  S.)  658;  Davenport  v.  Ruckman,  37  N.  Y. 
569;  Requa  v.  Rochester,  45  N.  Y.  129;  Clayburg  v.  Chicago,  25  111. 
525;  Springfield  v.  Le  Claire,  49  111.  476;  Smoot  v.  Mayor,  24  Ala.  112; 
Jones  v.  New  Haven,  34  Conn.  1 ;  County  Commissioners  v.  Duckett, 
20  Md.  468;  Pittsburg  v.  Greer,  22  Pa.  St.  54;  Erie  v.  Schwingle,  22 
Pa.  St.  388;  Cook  v.  Milwaukee,  24  Wis.  270;  Sawyer  v.  Coose,  17 
Grat  (Va.)  241;  Williams  College  v.  Cleveland,  12  Ohio,  377;  Mc- 
Combs  V.  Akron,  15  Ohio,  476. 
19 


290  STKEETS,  SEWERS,  ETC.  [§  221, 

that  of  the  latter,  even  when  vested  with  corporate  capac- 
ity and  the  power  of  taxation.^ 

1  Barnes  v.  District  of  Columbia,  91  U.  S.  551;  Dill.  Mun.  Corp., 
§§  10,  11,  13,  961:  Elmore  v.  Drainage  Commissioners,  135  111.  269. 

In  Elmore  v.  Drainage  Commissioners,  supra,  the  court  say: 

"  That  a  private  corporation  formed  by  voluntary  agreement  for 
private  purposes  is  held  to  respond  in  a  civil  action  for  its  negli- 
gence or  tort  goes  without  saying,  and  yet,  in  deciding  the  mooted 
question  at  issue  in  this  case,  it  seems  convenient  to  restate  that 
proposition.  So,  also,  it  is  admitted  law  that  municipal  corpora- 
tions proper,  such  as  villages,  towns  and  cities  which  are  incorporated 
by  special  charters  or  voluntarily  organized  under  general  laws,  are 
liable  to  individuals  injured  by  their  negligent  or  tortious  conduct 
or  that  of  their  agents  or  servants  in  respect  to  corporate  duties. 
In  regard  to  public  involuntary  gimsi-corporations  the  rule  is  other- 
wise, and  there  is  no  such  implied  liability  imposed  upon  them. 
These  latter,  such  as  counties,  townships,  school  districts,  road  dis- 
tricts and  other  similar  g2(asi-corporations,  exist  under  general  laws 
of  the  state,  which  apportion  its  territory  into  subdivisions  for  the 
purpose  of  civil  and  governmental  administration,  and  impose  upon 
the  people  residing  in  the  said  several  subdivisions  precise  and  lim- 
ited public  duties  and  clothe  them  with  restricted  corporate  func- 
tions co-extensive  with  the  duties  devolved  upon  them.  In  such 
organizations  the  duties  and  their  correlative  powers  are  assumed 
in  invihim,  and  there  is  no  responsibility  to  respond  in  damages  in 
a  civil  action  for  neglect  in  the  performance  of  duties  unless  such 
action  is  given  by  statute. 

"  The  grounds  upon  which  the  liability  of  the  municipal  corpora- 
tions proper  is  usually  placed  are  that  the  duty  is  voluntarily  as- 
sumed and  is  clear,  specific  and  complete,  and  that  the  powers  and 
means  furnished  for  its  proper  performance  are  ample  and  ade- 
quate. ...  In  such  case  there  is  a  perfect  obligation  and  a  con- 
sequent civil  liability  for  neglect  in  all  cases  of  special  private  dam- 
ages. The  non-liability  of  public  gitasi-corporations,  unless  liability 
is  expressly  declared,  is  usually  placed  upon  these  grounds:  that  the 
corporators  are  made  such  nolens  volens,  that  their  powers  are  lim- 
ited and  specific,  and  that  no  corporate  funds  are  provided  which 
can,  without  express  provisions  of  law,  be  appropriated  to  private 
indemnification.  Consequently,  in  such  case  the  liability  is  one  of 
imperfect  obligation,  and  no  civil  action  lies  at  the  suit  of  an  indi- 
vidual for  non-performance  of  the  duty  imposed." 


§  222.]  STREETS,  SEWERS,  ETC.  291 

§  222.  JS'ot  liable  if  damages  arise  from  ultra  vires  act 
of  officer. —  Where  the  officers  of  a  municipal  corporation 
assume  the  power  to  do  some  act  on  behalf  of  the  mu- 
nicipality which  is  ultra  vires  the  corporation,  no  liability 
is  in  consequence  imposed.^  To  establish  the  liability  of 
a  municipal  corporation  for  damages  resulting  from  the 
alleged  negligence  or  want  of  skill  of  its  agents  or  serv- 
ants in  the  course  of  their  employment,  it  is  essential  to 
show  that  the  act  complained  of  was  within  the  scope  of 
the  corporate  powers;  if  outside  the  powers  of  the  cor- 
poration as  conferred  by  statute  or  by  special  charter, 
the  corporation  is  not  liable,  whether  its  officers  directed 
the  performance  of  the  act  or  it  was  done  without  any 
express  direction.^     Or,  to  state  the  proposition  in  differ- 

1  Mayor,  etc.  v.  Cunliff,  2  Comst.  (N.  Y.)  165;  Browning  v.  Owen 
Co.,  44  Ind.  11;  Haag  v.  Commissioners,  60  Ind.  511;  Smith  v.  Roches- 
ter, 76  N.  Y.  506;  Anthony  v.  Adams,  1  Met.  (Mass.)  284;  Baker  v. 
Boston,  12  Pick.  (Mass.)  184;  Thayer  v.  Boston,  19  Pick.  (Mass.)  511; 
Perley  v.  Georgetown,  7  Gray  (Mass.),  464;  Baltimore  v.  Eschbach, 
18  Md.  276;  State  v.  Mayor,  27  Md.  85;  Railroad  Co.  v.  Quigley,  21 
How.  (U.  S.)  202;  Cooper  v.  Atlanta,  53  Ga.  638;  Sewell  v.  St.  Paul, 
20  Minn.  511;  Aldrich  v.  Tripp,  11  R.  I.  141;  Chicago  v.  McGraw,  75 
111.  566;  Mead  v.  New  Haven,  40  Conn.  72;  Morrison  v.  Lawrence,  98 
Mass.  219;  Barbour  v.  Ellsworth,  67  Me.  294.  Cf.  Salt  Lake  City  v. 
Hollister,  118  U.  S.  256. 

2  Smith  V.  Rochester,  76  N.  Y.  506. 

In  Salt  Lake  City  v.  Hollister,  supra,  a  distinction  has  been  drawn, 
and  a  rather  fine  one,  it  must  be  confessed,  between  the  liability  of 
a  municipality  for  the  wrongful  acts  of  its  agents  and  officers  in  the 
course  of  the  corpoi'ate  business  and  its  liability  on  contracts  which 
the  law  does  not  authorize  it  to  make.  That  was  a  case  where  a 
suit  was  instituted  by  Salt  Lake  City  to  recover  of  Hollister  a  sum 
of  money  said  to  be  illegally  exacted  by  him  as  collector  of  internal 
revenue  for  the  district  of  Utah  from  the  city  for  a  special  tax  upon 
spirits  alleged  to  have  been  distilled  by  said  city  and  not  deposited 
in  the  bonded  warehouse  of  the  United  States  by  plaintiff  as  re- 
quired by  law.  The  i^laintiff,  under  threat  of  selling  sufficient  prop- 
erty of  the  city  to  pay  said  taxes,  paid  the  sum  demanded  under 


292  STREETS,  SEWERS,  ETC.  [§  222. 

ent  language :  When  individuals,  although  professing  to 
act  under  color  of  authority  from  municipal  corporations, 
do  acts  which  are  injurious  to  others,  if  the  objects  and 

protest,  appealed  to  the  commissioner  of  internal  revenue,  who 
failed  to  refund  the  money,  and  after  waiting  six  months  brought 
suit.  It  was  held  that  a  municipal  corporation  cannot,  any  more 
than  any  other  corporation  or  private  person,  escape  the  taxes  due 
on  liquor,  whether  distilled  legally  or  illegally;  and  it  cannot  make 
the  want  of  legal  authority  to  engage  in  the  business  a  shelter  for 
the  taxation  imposed  by  the  government  on  such  business,  by  whom- 
soever conducted,  Mr.  Justice  Miller,  in  delivering  the  opinion  of 
the  court,  said: 

"  While  it  may  be  true  that  the  rule  we  have  been  discussing  may 
require  a  more  careful  scrutiny  in  its  application  to  municipal  cor- 
porations than  to  corporations  for  pecuniary  profit,  we  do  not  agree 
that  they  are  wholly  exempt  from  liability  for  wrongful  acts  done, 
with  all  the  evidence  of  their  being  acts  of  the  corporation,  to  the 
injury  of  others,  or  in  evasion  of  legal  obligations  to  the  state  or 
the  public.  .  .  .  The  question  of  the  liability  of  corporations  on 
contracts  which  the  law  does  not  authorize  them  to  make,  and 
which  are  wholly  beyond  the  scope  of  their  powers,  is  governed  by 
a  different  principle.  In  such  case  the  party  dealing  with  the  cor- 
poration is  under  no  obligation  to  enter  into  the  contract.  No  force 
or  restraint  or  fraud  is  practiced  on  him.  The  powers  of  the  cor- 
poration are  matters  of  public  law,  open  to  his  examination,  and  he 
may  and  must  judge  for  himself  as  to  the  power  of  the  corporation 
to  bind  itself  by  the  proposed  agreement.  It  is  to  this  class  of  cases 
that  most  of  the  authorities  cited  by  appellant  belongs  —  cases  where 
the  corporations  have  been  sued  on  contracts  which  they  have  suc- 
cessfully resisted  because  they  were  ultra  vires.  But  even  in  this 
class  of  cases  the  courts  have  gone  a  long  way  to  enable  parties  who 
had  parted  with  property  or  money  on  the  faith  of  such  contracts 
to  obtain  justice  by  recovery  of  the  property  or  the  money  specific- 
ally, or  as  money  had  and  received  to  their  use." 

Judge  Dillon,  in  discussing  this  case  in  his  valuable  work  on  Mu- 
nicipal Corporations,  in  a  note  to  section  973,  observes: 

"The  opinion  of  the  court  in  this  novel  case  seems  to  assert  the 
proposition  that  the  city,  although  acting  ultra  vires  in  the  strongest 
sense  of  that  expression,  i.  e.,  in  respect  of  a  matter  manifestly  and 
necessarily  outside  of  the  scope  of  its  powers  either  general  or  spe- 


§  222.]  STREETS,  SEWERS,  ETC.  293 

purposes  whicli  they  propose  to  accomplish  are  not  Avithin 
the  scope  of  the  corporate  powers  of  the  municipality, 
and  not  done  in  the  execution  of  any  corporate  duty  im- 

cial,  would  be  liable  in  tort,  although  perhaps  not  in  contract,  for 
the  acts  of  its  agents  and  servants  in  the  course  of  such  unauthor- 
ized business.  But  the  action,  viz.,  to  recover  back  taxes  actually 
though  involuntarily  paid,  being  equitable  in  its  nature,  the  judg- 
ment of  the  court,  which  on  the  special  facts  was  unquestionably 
sound  (for  the  tax  was  a  tax  upon  property  and  was  justly  due), 
need  not  necessarily  rest  upon  so  broad  a  basis  as  the  one  above  in- 
dicated, and  the  observations  of  the  court  in  the  opinion  must  be 
limited  accordingly.  If  not  thus  limited,  and  the  court  is  to  be 
understood  as  laying  down  the  broad  principle  that  the  city  would 
be  liable  in  the  conduct  of  such  business  to  the  same  extent  as  if 
the  business  was  infra  vires  (for  example,  that  it  would  be  liable  in 
damages  to  the  manager  of  the  distillery  for  a  negligent  injury  to 
him  happening  in  the  course  of  the  business),  it  would  be,  as  it  seems 
to  us,  an  extension  of  the  doctrine  of  liability  of  municipal  corpora- 
tions tor  ultra  vires  acts  beyond  the  limits  heretofore  and  generally 
recognized,  since  such  extended  liability  would  appear  to  rest  upon 
a  supposed  estoppel  created  by  the  mere  fact  of  conducting  an  ultra 
vires  business,  and  this  in  the  face  of  the  limitations  imposed  by  the 
charter  of  the  city  upon  its  corporate  powers.  Such  view,  if  sound 
as  respects  private  corporations,  would  seem  not  to  be  so  as  respects 
municipal  corporations,  whose  powers  are  defined  and  limited  for 
the  express  purpose  of  protecting  the  inhabitants  from  just  such 
liability.  Cases  within  the  apparent  or  possible  powers  of  the  mu- 
nicipality, where  the  other  party  acted  in  good  faith  and  had  no 
reasonable  means  of  protecting  himself  from  loss  or  damage,  may 
stand  upon  different  grounds." 

Mr.  Jones,  in  his  recent  work  on  Negligence  of  Municipal  Corpo- 
rations,  in  reviewing  this  criticism,  remarks: 

"This  decision  has  been  somewhat  criticised  by  an  eminent  au- 
thority, and  quite  a  limited  construction  is  put  upon  the  opinion  in 
the  case.  But  the  learning  of  the  justice  who  wrote  the  opinion, 
and  his  familiarity  with  the  subject  under  discussion,  as  well  as  a 
recent  reference  to  the  case  (Central  Transp.  Co.  v.  Pullman's  Car 
Co.,  139  U.  S.  24,  46  —  1890),  all  give  evidence  that  the  opinion  was  a 
deliberate  expression  of  the  view  of  the  court  upon  the  general  ques- 
tions discussed.    The  effect  of  this  decision  is  to  broaden  materially 


294  STEEETS,  SEWERS,  ETC.  [§  222. 

posed  upon  the  corporation  by  law,  the  city  is  not  liable 
for  the  damages  occasioned  by  such  acts. 

the  view  of  liability  of  municipal  corporations  for  torts,  and  it  is  a 
strong  authority  in  support  of  the  contention  that  these  bodies 
should  be  liable  for  negligence  in  respect  to  their  ultra  vires  acts. 
Following  its  reasoning  it  may  be  said  that  an  individual  who  con- 
tracts with  a  corporation  is  under  the  obligation  of  ascertaining  the 
powers  of  the  particular  body  with  which  he  assumes  to  deal.  But 
when,  as  a  member  of  society,  he  is  acting  within  his  own  rights,  and 
is  not  dealing  with  or  interfering  with  other  independent  members 
of  the  community,  he  should  not  be  without  remedy  when  injured  by 
an  ultra  vires  act  of  a  corporation  done  in  violation  of  his  right  of 
personal  safety.  Such  an  act  of  the  corporation  is  made  doubly 
wrongful  by  the  fact  that  it  is  in  excess  of  the  corporate  powers, 
and  for  the  damages  resulting  from  it  the  corporation  should  re- 
spond." 


CHAPTER  XYL 

POWERS  AND  LIABILITIES  AS  TO  MUNICIPAL  SECURITIES. 

§  223.  Power  to  issue  bonds. 

224.  Purposes  for  which  bonds  may  be  issued. 

225.  Instances  where  power  denied. 

226.  Formality  in  execution  as  affecting  legality, 

227.  Irregularity  as  affecting  liability. 

228.  Effect  of  recitals  in  bonds. 

229.  Who  are  bona  fide  holders. 

230.  Power  to  issue  bonds  not  implied  from  power  to  borrow, 

231.  Limitation  on  indebtedness  as  affecting  legality  of  bonds. 
282.  Invalid  bonds  cannot  be  ratified. 

233.  Liability  cannot  be  avoided  by  reorganization, 

234.  Liability  in  assumpsit  on  invalid  bonds. 

235.  Illegal  issue  of  bonds  may  be  enjoined. 

236.  Municipal-aid  bonds. 

2.37.  Power  must  be  specifically  granted. 

238.  Power  to  subscribe  to  railroad  stock. 

239.  Limitation  on  amount  of  subscription. 

240.  Levying  tax  to  pay  subscription. 

§  223.  Poiver  to  issue  l)onds. —  ^Municipal  corporations, 
unless  authorized  by  tiieir  charters,  have  no  power  to 
make  and  place  on  the  market  commercial  paper,  and  all 
persons  dealing  in  municipal  bonds  must  see  that  the 
power  to  issue  them  exists.^     There  is  no  presumption 

1  Police  Jury  v.  Britton,  15  Wall.  (U.  S.)  566;  Claiborne  County  v. 
Brooks,  111  U.  S.  400;  Concord  v.  Robinson,  121  U.  S.  165;  Kelley  v. 
Milan,  127  U.  S.  139;  Young  v.  Clarendon  Township,  132  U.  S.  340; 
Norton  v.  Dyersburg,  127  U.  S.  160;  Hill  v.  Memphis,  134  U.  S.  198; 
Merrill  v.  Monticello,  138  U.  S.  673;  Hewitt  v.  School  Dist,  94  ILL 
426;  Harding  v.  Rockford,  etc.  R.  Co.  65  111.  90;  Wiley  v.  Silliman,  63 
111.  170;  Clark  v.  Hancock,  27  111.  305. 


296  MUNICIPAL    SECURITIES.  [§  224. 

that  such  paper  has  been  issued  within  the  scope  of  their 
powers,  as  in  the  case  of  corporations  created  for  business 
purposes,  and  even  honafide  holders  cannot  recover  upon 
bonds  or  their  coupons  where  there  was  no  authority  to 
issue  the  bonds.^ 

§224.  Purposes  for  wMch 'bonds  may  1)6  issued. —  Mu- 
nicipal bonds  cannot  be  issued  for  other  than  public  pur- 
poses, inasmuch  as  the  taxation,  from  the  proceeds  of 
which  the  principal  and  interest  must  be  met,  can  only 
be  imposed  for  public  purposes.'^  Accordingly  a  munici- 
pal corporation  cannot,  without  legislative  authority,  issue 
bonds  in  aid  of  an  extraneous  object;  and  every  person 
dealing  in  them  must,  at  his  peril,  take  notice  of  the  ex- 
istence and  terms  of  the  law  which  conferred  the  power 
to  issue  them,  no  matter  under  what  circumstances  he 
may  obtain  them.* 

1  Hewitt  V.  School  Dist.,  supra,  and  cases  cited. 

In  Hewitt  v.  School  Dist.,  supra,  the  court  say:  "The  fact,  then, 
that  the  bond  was  not  issued  for  an  authorized  purpose  undeniably 
rendered  it  void.  Municipal  corporations  are  not  usually  endowed 
with  powers  to  enter  into  traflSc  or  general  business,  and  are  only 
created  as  auxiliaries  to  the  government  in  carrying  into  effect 
some  special  governmental  policy,  and  to  aid  in  preserving  the  order 
and  in  promoting  the  well-being  of  the  locality  over  which  their  au- 
thority extends.  .  .  .  Being  created  for  governmental  purposes, 
the  borrowing  of  money,  the  purchase  of  property  on  time  and  the 
giving  of  commercial  paper  are  not  inherent  or  even  powers  usually 
conferred;  and,  unless  endowed  with  such  power  in  their  charters, 
they  have  no  authority  to  make  and  place  on  the  market  such  paper, 
and  persons  dealing  in  it  must  see  that  the  power  exists." 

2 City  of  Eufaula  v.  McNab,  67  Ala.  588;  Hanson  v.  Vernon,  27 
Iowa,  47;  Parkersburg  v.  Brown,  106  U.  S.  487;  Camden  v.  Allen,  3 
Dutch.  (N.  J.)  398;  Pray  v.  Northern  Liberties,  31  Pa.  St.  69;  Sharp- 
less  V.  Mayor  of  Philadelphia,  21  Pa.  St.  147;  Allen  v.  Inhabitants  of 
Jay,  60  Me.  124;  Loan  Association  v.  Topeka,  20  Wall.  (U.  S.)  655-;. 
Curtis  v.  Whipple,  24  Wis.  350;  Whiting  v.  S.  &  F.  Ry.  Co.,  25  Wis. 
167;  Jenkins  v.  Andover,  103  Mass.  94. 

3  South  Ottawa  v.  Perkins,  94  U.  S.  260;  Brenham  v.  German  Am, 


§  225.]  MUNICIPAL    SECURITIES.  297 

§  225,  Instances  where  poicer  to  issue  denied. —  It  has 
been  held  that  a  city  has  no  power  to  incur  a  debt  and 
issue  bonds  to  raise  money  to  build  a  dam  across  a  river 
within  its  limits,  for  the  purpose  of  introducing  the  Avater 
of  such  river  into  the  city,  with  the  view  of  developing- 
the  natural  advantages  of  the  city  for  manufacturing  pur- 
poses.^ ISTor  has  a  municipal  corporation  power  to  au- 
thorize the  issuance  of  bonds  and  levying  of  taxes  in 
support  of  private  manufacturing  and  mining  companies ;  ^ 
nor  to  aid  persons  suffering  from  a  great  flood.^  But 
bonds  may  be  issued  for  the  making  and  paving  of  streets,'* 
to  sustain  public  schools,^  and  to  construct  public  build- 
ings.* 

Bank,  144  U.  S.  173;  Marsh  v.  Fulton  County,  10  Wall.  (U.  S.)  676; 
East  Oakland  v.  Skinner,  94  U.  S.  255;  Buchanan  v.  Litchfield,  103 
U.  S.  278;  Hays  v.  Holly  Springs,  114  U.  S.  120;  Daviess  County  v. 
Dickinson,  117  U.  S.  57;  Hopper  v.  Covington,  118  U.  S.  148;  Merrill 
V.  Monticello,  138  U.  S.  673. 

»  Mather  v.  Ottawa,  11  A.  &  E.  Corp.  Cas.  248  (III,  1885);  Ottawa  v. 
Carey,  108  U.  S.  110. 

2  Commercial  Bank  v.  Tola,  2  D  11.  (U.  S.)  353;  Loan  Association  v. 
Topeka,  3  Dill.  (U.  S.)  376;  S.  C,  20  Wall.  (U.  S.)  655;  Ohio  Iron 
Works  v.  Moundeville,  11  W.  Va.  1;  Allen  v.  Jay,  60  Me.  124;  Tyler 
V.  Beecher,  44  Vt.  648;  Bissell  v.  Kankakee,  64  111.  249;  Brodhead  v. 
Milwaukee,  19  Wis.  624;  Cole  v.  Le  Grange,  113  U.  S.  1. 

3 Lowell  v.  Boston,  111  Mass.  454;  State  v.  Osawkie  Township,  14 
Kan.  418. 

*  People  ex  rel.  v.  Ragg,  46  N.  Y.  401 ;  Lumsden  v.  Cross,  10  Wis. 
282;  Hammett  v.  Philadelphia,  65  Pa.  St.  155;  In  re  Washington 
Avenue,  69  Pa.  St.  352;  Rogers  v.  Burlington,  3  Wall.  (U.  S.)  654; 
People  v.  Mayor,  4  N.  Y.  419. 

9 Harper  v.  Emery,  14  Me.  375;  State  v.  McCann,  21  Ohio  St.  198; 
Williams  v.  School  District,  33  Vt.  271 ;  Danielly  v.  Cabaniss,  52  Ga. 
211;  Gordon  v.  Cornes,  47  N.  Y.  608;  Read  v.  Plattsmouth,  107  U.  S. 
568;  Merrick  v.  Amherst,  12  Allen  (Mass.),  500;  Hensley  v.  People, 
84  111.  544;  Marks  v.  Purdue  University,  37  Ind.  155;  Board  of  Edu- 
cation V.  State,  26  Kan.  44;  Bank  of  Sonoma  County  v.  Fairbanks, 
52  Cal.  196. 

6  Leavenworth  v.  Miller,  7  Kan.  749,  and  cases  cited  in  note  5. 


29S  MUNICIPAL  SECURITIES.  [§§  22G,  227. 

§  226.  Formality  in  execution  as  affecting  legality. — 
When  a  statute  authorizing  the  issue  of  bonds  provides 
that  the  bonds  shall  be  signed  by  the  mayor,  they  must 
be  signed  by  the  person  who  is  mayor  of  the  city  when 
they  are  signed,  and  not  by  any  other  person,  and  the 
city  council  cannot  empower  any  other  person  to  sign 
them.  And  Avhere  it  affirmatively  appears  that  the  per- 
son who  was  mayor  of  the  city  at  the  time  when  the 
bonds  were  signed  took  no  part  in  signing,  delivering  or 
issuing  them,  the  city  is  not  estopped  from  contesting  the 
validity  of  such  bonds  upon  the  ground  that  they  had 
not  been  signed  by  the  mayor  of  the  city  as  required  by 
statute.^ 

§  227.  Irregnlarity  as  affecting  Uahility. — ."Where  mu- 
nicipal bonds  are  in  the  hands  of  a  bo?ia  fide  holder,  and 
the  recitals  therein  are  to  the  eflfept  that  the  same  are 
lawfully  issued,  mere  irregularities  cannot  be  taken  ad- 
vantage of  by  the  city  in  suits  brought  thereon  against 
the  municipality.'^  The  persons  who  execute  and  deliver 
the  bonds  are  the  agents  of  the  city  authorizing  their 
issue,  and  if  these  agents  exceed  their  authority  as  to 

iColer  V.  Cleburne,  131  U.  S.  162;  Anthony  v.  County  of  Jasper, 
101  U.  S.  693;  Bissell  v.  Spring  Valley  Township,  110  U.  S.  162;  North- 
ern Bank  v.  Porter  Township,  110  U.  S.  608;  Merchants'  Bank  v.  Ber- 
gen Co.,  115  U.  S.  384, 

2Rouede  v.  Jersey  City,  18  Fed.  Rep.  719;  Knox  Co.  v.  Aspinwall, 
21  How.  (U.  S.)  4.39;  Moran  v.  Miami  Co.,  2  Black  (U.  S.),  722;  Super- 
visors V.  Schenck,  5  Wall.  (U.  S.)  772;  Gelpcke  v.  Dubuque,  1  Wall 
(U.  S.)  175;  St.  Joseph  Township  v.  Amy,  16  Wall.  (U.  S.)  644;  Pen- 
dleton V.  Amy,  18  Wall.  (U.  S.)  297;  Coloma  v.  Eavis,  92  U.  S.  484; 
County  of  Randolph  v.  Post,  93  U.  S.  502;  Commissioners  v.  Thayer, 
D4  U.  S.  631;  Cass  County  v.  Johnson,  95  U.  S.  360;  San  Antonio  v. 
Mehaflfey,  96  U.  S.  312;  Nauvoo  v.  Ritter,  97  U.  S.  389;  Daviess  Co. 
V.  Huidekoper,  98  U.  S.  98;  Hackett  v.  Ottawa,  99  U.  S.  86;  Foots  v. 
Pike  Co.,  101  U.  S.  688. 


§  228.J  MUNICIPAL    SECUKITIES.  299 

form,  manner,  detail  or  circumstance,  the  loss  must  fall 
on  those  whom  they  represent,  and  not  on  those  who  deal 
with  them.^ 

§  228.  Effect  of  recitals  in  mmiiciiKd  honds. —  The  effect 
of  recitals  in  municipal  bonds  is  like  that  given  to  words 
of  negotiability  in  a  promissory  note.  They  simply  relieve 
the  paper  in  the  hands  of  a  honajide  holder  from  the  bur- 
den of  defenses  other  than  the  lack  of  power  growing 
out  of  the  original  issue  of  the  paper,  and  available  as 
against  the  original  payee.  If  municipal  bonds  contain 
recitals  which,  upon  fair  construction,  amount  to  a  repre- 
sentation that  the  municipality's  indebtedness,  increased 
by  the  amount  of  bonds  in  question,  is  within  the  consti- 
tutional limit,  the  municipality  will  be  estopped  from  dis- 
puting the  truth  of  such  representation  as  against  a  hona 
fide  holder  of  its  bonds.'  And  where  legislative  author- 
ity has  been  given  to  a  municipality  or  to  its  officers  to 
subscribe  to  the  stock  of  a  railroad  company,  and  to  issue 
municipal  bonds  in  payment,  but  only  on  some  precedent 
condition,  such  as  a  popular  vote  favoring  the  subscrip- 
tion, and  where  it  may  be  gathered  from  the  legislative 
enactment  that  the  officers  of  the  municipality  were  in- 
vested with  power  to  decide  whether  the  condition  prece- 
dent has  been  complied  Avith,  their  recital  that  it  has 
been,  made  on  the  bonds  issued  by  them  and  held  by  a 
hona  fide  purchaser,  is  conclusive  of  the  fact,  and  binding 
upon  the  municipality.^  But  if  the  officers  authorized  to 
issue  bonds  upon  a  condition  are  not  the  appointed  tri- 

1  County  of  Daviess  v.  Huidekoper,  98  U.  S.  100. 

2  Buchanan  v.  Litchfield,  102  U.  S.  278;  Coloma  v.  Eavis,  92  U.  S. 
484;  Orleans  v.  Pratt,  99  U.  S.  676;  Nesbit  v.  Eiverside  District,  144 
U.  S.  620. 

3  Coloma  V.  Eavis,  92  U.  S.  484;  Orleans  v.  Pratt,  99  U.  S.  676;  Bu- 
chanan V.  Litchfield,  102  U.  S.  278. 


300  MUNICIPAL    SECURITIES.  [§  228. 

bunal  to  decide  the  fact  which  constitutes  the  condition, 
their  recital  will  not  be  accepted  as  a  substitute  for  proof. 
The  grounds  of  the  estoppel  is  that  the  recitals  are  the 
official  statements  of  those  to  whom  the  law  refers  the 
public  for  authentic  and  final  information  on  the  subject.^ 
So  a  recital  in  a  bond  that  it  was  issued  in  accordance 
with  authority  conferred  by  an  act,  specifying  it,  and  in 
accordance  with  a  vote  of  a  majority  of  the  qualified 
voters,  is  sufficient  to  validate  the  bond  in  the  hands  of  a 
hona  fide  holder,  and  the  certificate  of  its  regularity  by 
the  auditor  of  the  state  is  conclusive  upon  the  munici- 
pality.^ And  the  recitals  in  a  bond  issued  under  an  act 
of  the  legislature,  authorizing  counties  to  fund  their  debts, 
which  show  full  compliance  with  the  act  but  not  the 
amount  of  issue,  will  estop  the  county  from  alleging, 
against  a  hona  fide  holder,  that  the  bond  was  issued  in 
violation  of  the  constitutional  limitation.^  But  when  the 
bonds  issued  bj^  a  municipal  corporation  do  not  contain 
any  recitals  to  the  effect  that  the  corporation  is  actually 
authorized  to  issue  them,  the  corporation  is  not  estopped 
from  denying  the  authority  of  its  supervisor  and  clerk  to 
issue  them.*  From  the  foregoing  it  may  be  seen  that  the 
principle  is  Avell  established  that  where  the  power  exists 
by  legislative  authority  to  issue  negotiable  securities,  and 
the  local  officers,  who  by  the  statute  are  invested  with 
the  duty  to  carry  out  or  execute  this  power,  issue  the 
bonds  with  recitals  that  the  right  to  issue  them  exists,  or 
has  arisen,  and  the  bonds  have  passed  into  the  hands  of 
hona  fide  holders  for  value,  they  are  not  open  to  the  de- 
fense of  consideration  or  fraud  on  the  part  of  the  officers, 

1  Dixon  County  v.  Field,  111  U.  S.  83. 

2  Commanche  County  v.  Lewis,  133  U.  S.  198. 

3  Potter  V.  Commissioners  of  Chaffee  Co.,  33  Fed.  Rep.  614. 
■*  Concord  v.  Robinson,  121  U.  S.  165. 


I  229.]  MUNICIPAL    SECURITIES.  301 

or  non-compliance  with  precedent  conditions  to  the  right 
to  exercise  the  power.^ 

§  229.  WJio  are  lona  fide  liolders. —  To  be  a  honafide 
holder,  one  must  be  himself  a  purchaser  for  value  with- 
out notice,  or  the  successor  of  one  who  was.  Every  man 
is  chargeable  with  notice  of  that  which  the  law  requires 
him  to  know,  and  of  that  which,  after  being  put  upon  in- 
quiry, he  might  have  ascertained  by  the  exercise  of  rea- 
sonable diligence.  As  an  essential  preliminary  to  protec- 
tion as  a  hona  fide  holder,  authority  to  issue  municipal 
bonds  must  appear.  If  such  authority  did  not  exist,  the 
doctrine  of  protection  to  a  honafide  purchaser  has  no  ap- 
plication. This  is  the  rule  even  with  commercial  paper 
purporting  to  be  issued  under  a  delegated  authority. 
This  delegation  must  be  first  established  before  the  doc- 
trine can  come  in  for  consideration."^  So  every  dealer  in 
municipal  bonds,  which  upon  their  face  refer  to  the  stat- 
ute under  which  they  were  issued,  is  bound  to  take  notice 
of  the  statute  and  of  all  its  requirements.^  And  all  per- 
sons taking  securities  of  municipal  corporations  having 
only  special  powers  must  see  to  it  that  the  conditions 
prescribed  for  the  exercise  of  the  power  existed.  So  it 
has  been  held  that  persons  who  purchase  bonds  issued 
under  an  unconstitutional  act,  upon  the  certificate  of  the 
municipal  authorities  that  a  majority  of  the  voters  had 

1  Carpenter  v.  Buena  Vista  Co.,  5  Dill.  (U.  S.)  560;  Knox  v.  Aspin- 
wall,  21  How.  (U.  S.)  539;  Moran  v.  Miami  Co.,  2  Black  (U.  S.),  722; 
St.  Joseph  Township  v.  Rogers,  16  Wall.  (U.  S.)  644;  Grand  Chute  v. 
Winegar,  15  Wall.  (U.  S.)  373;  Kennicott  v.  Supervisors,  16  Wall. 
(U.  S.)  453;  Lexington  v.  Butler,  14  Wall.  (U.  S.)  282;  Northern  Bank 
V.  Trustees,  110  U.  S.  608;  Dixon  County  v.  Field,  111  U.  S.  83. 

2  Merchants'  Bank  v.  Bergen  Co.,  115  U.  S.  384;  McClure  v.  Oxford 
Township,  94  U.  S.  429;  Ogden  v.  Daviess  County,  102  U.  S.  634; 
Hayes  v.  Holly  Springs,  114  U.  S.  120;  Hackett  v.  Ottawa,  99  U.  S.  86. 

3  McClure  v.  Oxford  Township,  supra. 


302  MUNICIPAL   SECURITIES.  [§  230. 

voted  for  the  issue,  are  not  to  be  protected  as  innocent 
and  hona  fide  purchasers  without  notice,  being  charged 
with  knowledge  of  the  illegal  origin  of  the  bonds.^  And 
where  the  charter  of  a  municipal  corporation  requires 
that  bonds  issued  by  it  shall  specify  for  what  purpose 
they  are  issued,  a  bond  which  purports  on  its  face  to  be 
issued  by  virtue  of  an  ordinance,  the  date  of  which  is 
given,  but  not  its  title  or  its  contents,  does  not  so  far  sat- 
isfy the  requirements  of  the  charter  as  to  protect  an  in- 
nocent holder  for  value  from  defenses  which  might  other- 
wise be  made.- 

§  230.  Poiver  to  issue  l)onfls  not  implied  from  power  to 
J)orrotv. —  The  implied  power  of  a  municipal  corporation 
to  borrow  money  to  enable  it  to  execute  the  powers  ex- 
pressly conferred  upon  it  by  law,  if  existing  at  all,  does 
not  authorize  it  to  create  and  issue  negotiable  securities 
to  be  sold  in  the  market  and  to  be  taken  by  the  purchaser 
freed  from  the  equities  that  might  be  set  up  by  the  maker 
of  it.*  As  a  general  rule,  whether  a  municipal  corpora- 
tion possesses  the  power  to  borrow  money  and  to  issue 
negotiable  securities  therefor  depends  upon  a  true  con- 

1  Duke  V.  Brown,  17  A.  &  E.  Corp.  Cas.  (N.  G,  1887),  336. 

2  Barrett  v.  Dennison,  145  U.  S.  135,  and  cases  there  cited. 

3  Merrill  v.  Monticello,  138  U.  S.  673;  Brenham  v.  German  Bank, 
144  U.  S.  173;  Hill  v.  Memphis,  134  U.  S.  198;  Young  v.  Clarendon, 
132  U.  S.  340:  Norton  v.  Dyersburg,  127  U.  S.  139;  Concord  v.  Robin 
son,  121  U.  S.  165;  Mayor  v.  Ray,  19  Wall.  (U.  S.)  478;  Emery  v. 
Mariaville,  56  Me.  315;  Willey  v.  Greenbush,  30  Me.  452;  Clark  v. 
Des  Moines,  19  Iowa,  199;  School  District  v.  Lombard,  2  Dill.  (U.  S.) 
498;  Keller  v.  Leavenworth  Co.,  6  Kan.  510;  Goodwin  v.  Ramsay 
Co.,  11  Minn.  31;  Smith  v.  Chesire,  13  Gray  (Mass.),  318;  Andover  v. 
Grafton,  7  N.  H.  298;  Mathes  v.  Cameron,  68  Mo.  504;  People  v. 
County,  11  Cal.  170;  Chandler  v.  Bay  St.  Louis,  57  Miss.  327;  Wall 
V.  Monroe  County,  103  U.  S.  704;  Ouachita  Co.  v.  Wolcott,  103  U.  S. 
557. 


§  231.]  MUNICIPAL    SECURITIES.  303 

struction  of  its  charter  and  the  legislation  of  the  state 
applicable  to  it.  It  has  no  incidental  or  inherent  author- 
ity under  the  usual  grants  of  municipal  powers  as  a  means 
of  discharging  its  ordinary  municipal  functions.  Such 
authority  may  be  inferred  from  special  and  extraordinary 
powers,  which  require  the  expenditure  of  unusual  sums 
of  money,  when  such  appears  to  have  been  the  legislative 
intent.^ 

§  231.  Limitation  on  indebtedness  as  affecting  lefjality 
of  bonds. —  As  a  general  proposition,  all  bonds  issued  by  a 
municipality  in  excess  of  the  constitutional  or  statutory 
limitation  placed  upon  its  indebtedness,  even  in  the  hands 
of  a  bona  fide  holder,  are  illegal  and  void.  But,  in  cases 
of  this  kind,  a  municipal  corporation's  liability  is  usually 
dependent  upon  the  peculiar  circumstances  governing  the 
particular  case.  This  branch  of  the  question  cannot  be 
better  explained  than  by  giving  instances  where  the  ques- 
tion has  arisen  and  been  decided.  Thus,  where  the  in- 
debtedness of  a  city  was  restricted  to  $50,000,  an  issue  of 
bonds  for  $300,000  by  such  city  was  held  to  be  invalid, 
notwithstanding  the  fact  that  the  bonds  were  not  payable 
for  twenty  years,  and  the  yearly  tax  levied  with  interest 
upon  them  would  not  exceed  $50,000  annually .^  But  it  has 
been  held  that  where  the  amended  charter  of  a  city  au- 
thorized the  city  council  to  borrow  money  and  issue  bonds 
for  an  amount  not  to  exceed  $100,000,  the  bonded  debt  of 
the  city  is  thereby  limited  to  $100,000,  and  the  city  has 
authority  for  the  public  use  of  the  corporation  to  issue 
bonds  at  any  one  time  to  the  extent  of  $100,000.^  Cer- 
tificates of  indebtedness  issued  to  procure  temporary  loans 

iGause  v.  Clarksville,  5  Dill.  (U.  S.)  165;  Dill.  Mun.  Corp.,  §  124. 

2Coulson  V.  Portland,  Deady  (U.  S.),  481. 

3  Mauldin  v.  Greenville,  31  A.  &  E.  Corp.  Cas.  604  (S.  C,  1890). 


SOi  MUNICIPAL   SEOUEITIES.  [§  231. 

of  money  for  current  expenses  are  ultra  vires  if,  at  the 
time  they  were  issued,  the  debt  of  the  municipality  had 
reached  the  constitutional  limit.^  But  generally  only  that 
part  of  the  indebtedness  incurred  which  exceeds  the  con- 
stitutional limitation  will  be  held  to  be  void.^  And  a 
judgment  may  be  recovered  for  bonds  first  delivered  up 
to  the  amount  authorized.^ 

1  Law  V.  People,  87  111.  385. 

2  McPherson  v.  Foster,  43  Iowa,  48;  Culbertson  v.  Fulton,  18  N.  E. 
Rep.  781;  Stockdale  v.  Wayland  School  District,  47  Mich.  226;  County 
of  Daviess  v.  Dickinson,  117  U.  S.  657;  Hedges  v.  Dixon  County,  37 
Fed.  Rep.  304. 

2  County  of  Daviess  v.  Dickinson,  supra. 

In  the  case  of  Hedges  v.  Dixon  County  it  was  held  that,  if  a  county 
contracts  to  issue  bonds  as  a  donation  of  a  specific  sum  in  aid  of  the 
construction  of  a  railroad,  the  contract  is  to  be  deemed  entire  and 
indivisible,  although  the  amount  of  the  donation  is  represented  by 
a  number  of  bonds.  The  whole  donation  is  therefore  ultra  vires  and 
the  whole  bonds  are  void,  and  the  jurisdiction  of  a  court  of  equity 
cannot  be  invoked  by  the  bondholders  for  the  purpose  of  scaling 
down  the  donation  in  so  far  as  it  exceeds  the  constitutional  limit. 
Mr.  Justice  Brewer,  in  delivering  the  opinion  of  the  court  in  this 
cas~,  said: 

'"The  contract  in  this  case,  in  its  inception,  was,  on  the  part  of  the 
county,  a  single  and  indivisible  obligation;  that  is,  an  attempted 
donation  of  $87,000  to  the  railroad  company.  The  bonds  are  merely 
■evidences  of  the  contract,  the  contract  standing  beliind  them,  and, 
whatev^er  separate  and  divisible  obligations  of  the  county  exist  after 
the  issue  of  the  bonds,  the  contract  in  the  first  instance  was  single 
and  entire.  Now,  that  was  an  attempted  donation  of  §87,000  to  the 
railroad  company.  Such  donations  the  county  had  no  right  to  make, 
^nd,  after  it  had  finished  its  action,  nothing  which  the  promisee,  the 
other  party  to  the  contract,  could  do  could  give  validity  to  the  obli- 
gation of  the  county.  It  was  either  good  or  bad,  dead  or  alive,  when 
it  left  the  hands  of  the  px-omisor.  Take  this  illustration:  If,  in  a 
state  where  usury  avoids  the  entire  contract,  a  usurious  note  be 
given,  the  note  is  void,  and  no  willingness  of  the  payee,  no  act  of  his, 
can  transform  that  invalid  into  a  valid  contract.  Of  course  it 
would  be  very  satisfactory  if  the  promisee,  by  consenting  to  a  re- 
duction of  the  interest,  could  give  validity  to  a  void  promise  — va- 


§  232.]  MUNICIPAL    SECUEITIES.  305 

§  232.  Invalid  honds  cannot  he  ratified. — As  we  have 
heretofore  seen,^  it  is  impossible  to  ratify  a  contract  the 
original  making  of  which  was  outside  the  scope  of  the 
-corporate  powers.  So  the  express  assent  of  all  the  in- 
habitants of  a  municipality  will  not  validate  bonds  issued 
in  excess  of  the  constitutional  limit.'  Nor  is  the  payment 
■of  interest  on  the  whole  bonds  issued  a  ratilication  of 
those  which  have  been  issued  beyond  the  lawful  limit.^ 
The  inhabitants  of  a  city  are  not  estopped  from  contest- 
ing the  validity  of  bonds  by  standing  by  in  silence  and 
permitting  the  bonds  to  be  issued ;  nor  is  the  municipality 
estopped  by  knowledge  and  long  acquiescence  in  the  act 
of  the  officers  issuing  them,  and  by  the  lev^y  of  taxes  and 
the  payment  of  interest.* 

lidity  to  a  dead  contract.  So  here,  if  the  promisee,  the  railroad 
company,  could  reduce  the  extent  of  the  promise,  it  doubtless  would 
be  satisfactory,  but  it  would  thereby  be  making  a  contract,  or  at- 
tempting to  make  a  contract,  different  from  that  which  the  prom- 
isor proposed.  The  fact  that  eighty-seven  bonds  were  issued  instead 
of  one  in  no  manner  changes  the  primary  obligation  attemj^ted  to 
be  assumed  by  the  county." 

To  a  casual  reader  the  case  just  quoted  from  would  seem  to  con- 
flict with  Daviess  County  v.  Dickinson.  In  the  last-named  case, 
the  county  having  authorized  the  issue  of  bonds  to  the  amount  of 
$250,000,  the  county  officers  issued  $320,000;  but  the  cases  are  not  at 
all  parallel.  In  the  Daviess  County  case  the  principal  had  proposed  a 
valid  contract.  It  had  done  that  which  it  had  a  right  to  do,  and 
the  wrong  and  misconduct  of  its  agents  was  held  not  to  invalidate 
that  which  the  county  had  lawfully  authorized.  In  the  Hedges 
case  the  action  of  the  principal  was  ultra  vires  and  created  no  valid 
obligation. 

1  §  78,  ante. 

2McPherson  v.  Foster,  43  Iowa,  48;  Dill.  Mun,  Corp.,  g  529;  Bu- 
chanan V.  Litchfield,  102  U.  S.  278;  Dixon  County  v.  Field,  111  U.  S.  83. 

3  County  of  Daviess  v.  Dickinson,  117  U.  S.  657;  Dill.  Mun.  Corp., 
§548. 

4McPherson  v.  Foster,  43  Iowa,  48;  Dill.  Mun.  Corp.,  §  546. 
20 


306  MUNICIPAL   SECURITIES.  [§  233. 

§  233.  LiaVilitij  cannot  "he  avoided  hj  reorganization. — 
Municipal  corporations  cannot  extinguish  their  debts  by 
changing  their  names,  or  reorganizing  under  new  char- 
ters, or  by  failure  to  exercise  their  corporate  powers.  A 
debt  once  contracted  by  a  municipal  corporation  will  sur- 
vive as  a  debt  against  whatever  corporate  entity  is  sub- 
sequently created  to  take  its  place  and  exercise  its  powers 
of  local  government  over  substantiallj'-  the  same  people 
and  territory.^  Even  if  a  municipal  corporation  can  for- 
feit its  franchise  by  non-user,  such  forfeiture  will  not  op- 
erate to  extinguish  debts  of  the  corporation  contracted 
before  the  forfeiture  was  incurred  or  declared.^ 

1  Broughton  v.  Pensacola,  93  U.  S.  266;  Mobile  v.  Watson,  116  U.  S; 
289;  Laird  v.  De  Soto,  23  Fed.  Rep.  431;  People  v.  Murray,  73  N.  Y. 
535;  Hill  v.  City  of  Kahoka.  35  Fed.  Rep.  33. 

2  Hill  V.  City  of  Kahoka,  supra. 

In  Broughton  V.  Pensacola,  supra,  the  court  say:  -'Although  a 
municipal  corporation,  so  far  as  it  is  invested  with  subordinate  legis- 
lative powers  for  local  purposes,  is  a  mere  instrumentality  of  the 
Btate  for  the  convenient  administration  of  government,  yet,  when 
authorized  to  take  stock  in  a  railroad  company,  and  issue  its  obliga- 
tions in  payment  of  the  stock,  it  is  to  that  extent  to  be  deemed  a 
private  corporation,  and  its  obligations  are  secured  by  all  the  guar- 
anties which  protect  the  engagements  of  private  individuals.  The 
inhibition  of  the  constitution  which  preserves  against  the  inter- 
ference of  a  state  the  sacredness  of  contracts  applies  to  the  liabilities- 
of  municipal  corporations  created  by  its  permission;  and  although, 
the  repeal  or  modification  of  the  charter  of  a  corporation  of  that 
kind  is  not  within  the  inhibition,  yet  it  will  not  be  admitted,  where 
its  legislation  is  susceptible  to  another  construction,  that  the  state 
has  in  this  way  sanctioned  an  evasion  of,  or  escape  from  liabilities, 
the  creation  of  which  is  authorized.  When,  therefore,  a  new  form 
is  given  to  an  old  municipal  corporation,  or  such  a  corporation  is  re- 
organized under  a  new  charter,  taking  in  its  new  organization  the 
place  of  the  old  one,  embracing  substantially  the  same  corporators 
and  the  same  territory,  it  will  be  presumed  that  the  legislature  in- 
tended a  continued  existence  of  the  same  corporation,  although 
different  powers  are  possessed  under  the  new  charter,  and  different 


§  234.]  MUNICIPAL    SEOUKITIES.  307 

§  234.  Lialilitij  in  assumpsit  on  invalid  'bonds. —  It  is 
the  settled  doctrine  that  if  a  municipal  corporation  has 
received  money  for  an  authorized  purpose,  derived  from 
the  issue  of  illegal  and  void  bonds,  and  has  applied  it  to 
that  purpose,  an  action  will  lie  as  for  money  had  and  re- 
ceived, although  the  corporation  had  no  authority  to 
issue  the  bonds.^  So  where  money  is  borrowed  by  a  mu- 
nicipal corporation  without  authority  of  law,  but  for 
a  legitimate  purpose,  although  warrants  issued  to  the 
lender  of  such  money  may  be  ultra  vires  and  void,  yet 
the  corporation  is  liable  as  on  an  implied  assumpsit  for 
money  had  and  received;  but  this  principle  does  not  apply 
when  there  is  an  express  prohibition  of  the  power  to 
borrow  money .^  And  when  negotiable  certificates  of  in- 
debtedness issued  by  a  city  have  been  sued  upon  by  the 
payee,  and  declared  invalid  for  want  of  power  to  issue 
negotiable  instruments,  the  payee  may  maintain  an  action 
for  money  had  and  received,  provided  the  city  had  power 
to  make  the  contract  out  of  which  the  indebtedness 
arose.^  Where,  however,  bonds  of  a  city  are  void  be- 
cause issued  under  a  provision  of  the  constitution  of  the 
state  which  declares  that  the  general  assembly  shall  not 

officers  administer  its  affairs;  and,  in  the  absence  of  express  pro- 
visions for  their  payment  otherwise,  it  will  also  be  presumed  in 
such  case  that  the  legislature  intended  that  the  liabilities  as  well 
as  the  rights  of  property  of  the  corporation  in  its  old  form  should 
accompany  the  corporation  in  its  reorganization." 

1  Bangor  Savings  Bank  v.  Stillwater,  49  Fed.  Rep.  721;  Louisiana 
V.  New  Orleans,  103  U.  S.  204;  Chapman  v.  County  of  Douglas,  107 
U.  S.  348;  Hitchcock  v.  Galveston,  96  U.  S.  341;  Norton  v.  City  of 
Nevada,  41  Fed.  Rep.  583. 

2  Allen  V.  La  Fayette,  89  Ala.  641 ;  Salt  Lake  City  v.  Hollister,  118 
U.  S.  256;  Marsh  v.  Fulton  County,  10  Wall.  (U.  S.)  676;  Louisiana 
V,  Wood,  103  U.  S.  294;  Chapman  v.  County  of  Douglas,  107  U.  S.. 
348;  Litchfield  v.  Ballou,  114  U.  S.  190. 

s  Bangor  Savings  Bank  v.  Stillwater,  supra. 


308  MUNICIPAL   SECURITIES.  [§  235. 

authorize  any  city  to  loan  its  credit  to  any  corporation 
unless  two-thirds  of  the  qualified  voters  assent  thereto, 
the  purchaser  cannot  maintain  an  action  for  money  had 
and  received  to  recover  the  amount  paid  to  the  city  for 
such  bonds,  as,  the  city  having  no  power  to  create  the 
debt,  no  implied  power  can  arise  for  its  payment,  notwith- 
standing the  general  statutes  gave  the  board  of  trustees 
power  "  to  borrow  mone}'"  for  the  improvement "  of  the 
town,  the  money  having  been  borrowed  in  violation  of 
the  constitution,  and  not  for  the  improvement  of  the 
town,  but  to  buy  a  right  of  way  and  depot  grounds  for  a 
railroad.^ 

§  235.  Illegal  issue  of  honds  may  ie  enjoined. —  Any  citi- 
zen and  tax-payer  may  restrain  the  illegal  issue  and  sale 
of  bonds  by  a  municipal  corporation  if  there  is  no  ade- 
quate remedy  at  law,  if  valid  in  the  hands  of  an  innocent 
purchaser  for  value,-  But  a  tax-payer  cannot  enjoin  the 
issue  of  bonds  voted  by  a  city  which  would  be  void  even 
in  the  hands  of  a  ho7ia  fide  purchaser,  since  neither  he 
nor  the  city  could  suffer  injury  from  the  issue.*  It  is  not 
necessary  for  a  person  to  wait  until  his  liability  is  fixed 
before  he  can  have  redress.  It  is  enough  that  he  may  be 
affected  by  an  illegal  ordinance  or  resolution  to  entitle 
him  to  a  hearing,  before  any  attempt  has  been  made  to 

1  Norton  v.  City  of  Nevada,  41  Fed.  Rep.  582. 

2  Johnson  County  v.  McClintock,  51  Ind.  335;  Livingston  County 
V.  Welder,  64  111.  249;  Allison  v.  Railway  Co.,  9  Busb  (Ky.),  247; 
Bound  V.  Railway  Co.,  45  Wis.  543;  Wright  v.  Bishop,  88  111.  302; 
Springfield  v.  Edwards,  84  111.  266;  Flack  v.  Hughes,  67  111.  384;  Win- 
ston v.  Tennessee,  etc.  Ry.,  1  Bax.  (Tenn.)  60;  State  v.  Montgomery, 
74  Ala.  226;  Lynch  v.  Eastern,  etc.  Ry.,  57  Wis.  430;  Wilkinson  v. 
Peru.  61  Ind.  1;  Meyer  v.  Porter,  65  Cal.  67;  Hodgman  v.  Chicago, 
etc.  R.  Co.,  20  Minn,  48;  Redd  v.  Henry  County,  31  Grat.  (Va.)  695, 

3  Bolton  V.  City  of  San  Antonio,  21  S.  W.  Rep.  64, 


§§  236,  237.]  MUNICIPAL  seottkities.  309 

enforce  it.^  So  courts  of  equity  have  jurisdiction  to  en- 
join the  board  of  supervisors  of  a  municipal  corporation 
from  passing  an  ordinance  which  is  not  within  the  scope 
of  their  powers,  where  the  passage  of  such  ordinance  would 
work  irreparable  injury .^ 

§236.  Municipal-aid  honds. —  Some  twenty-five  or 
thirty  years  ago  a  veritable  railroad  epidemic  swept  over 
this  country,  depositing  its  infectious  germs  in  almost 
every  county,  township  and  city  in  the  land.  Under  the 
influence  of  this  frenzied  excitement,  the  honest  but  en- 
thusiastic tax-payer  voted  such  an  avalanche  of  indebt- 
edness upon  himself  that  in  many  communities  he  has 
scarcely  yet  recovered  from  the  effects  of  his  March-hare 
madness.  He  has  learned  a  thing  or  two,  however,  and 
it  would  not  be  considered  safe,  or  at  least  wise,  for  a 
sleek  and  smiling  emissary  of  a  proposed  railroad  corpo- 
ration to  again  go  through  such  rural  districts  soliciting 
aid  for  some  gigantic  enterprise  the  completion  of  which 
would  certainly  make  every  tiller  of  the  soil  rich  be- 
yond the  wildest  dreams  of  avarice. 

§  237.  Same  subject — Power  must  l)e  specifically  granted. 
The  power  of  municipal  corporations,  when  authorized 
by  the  legislature,  to  engage  in  works  of  internal  im- 
provements, such  as  building  of  railroads,  canals,  har- 
bors, and  the  like,  or  to  loan  their  credit  in  aid  thereof, 
and  to  defray  the  expenses  of  such  improvements  by  an 
exercise  of  the  power  of  taxation,  has  always  been  sus- 

1  State  V.  City  of  Paterson,  34  N.  J.  163;  State  v.  Jersey  City,  ^ 
Dutch.  (N.  J.)  170. 

^  Spring  Valley  Water  Works  v.  Bartlett,  61  Cal.  3.  And  see  gen- 
erally as  to  injunction,  Dill.  Mun,  Corp.,  §  519;  Union  Pacific  R.  Co.  v. 
Lincoln  County,  3  Dill.  (U.  S.)  300;  McClure  v.  Oxford  Township,  94 
U.  S.  429;  Portland,  etc.  R.  Co.  v.  Hartford,  58  Me.  23. 


310  MUNICIPAL    SECURITIES.  [§  237. 

tained  on  the  ground  that  such  works,  by  reason  of  the 
facilities  which  they  afford  for  trade,  commerce  and  inter- 
communication between  different  and  distinct  portions  of 
the  country,  are  indispensable  to  the  public  interests  and 
public  functions,^  The  power  of  municipalities  to  issue 
bonds  in  aid  of  such  enterprises,  however,  does  not  exist 
unless  specifically  granted  by  the  legislature.^  And  where 
the  power  does  not  exist,  the  bonds  issued  are  void,  no 
matter  in  whose  hands  they  may  be  found.'  A  grant  to 
a  municipal  corporation  of  power  to  appropriate  money 
in  aid  of  the  construction  of  a  railroad,  accompanied  by 
a  provision  directing  the  levy  and  collection  of  taxes  to 
meet  such  appropriation,  and  prescribing  no  other  mode 
of  payment,  does  not  authorize  the  issuing  of  negotiable 
bonds  in  payment  of  such  appropriation.*  Whilst  a  mu- 
nicipal corporation,  authorized  to  subscribe  for  the  stock 
of  a  railroad  company,  or  to  incur  any  other  obligation, 
may  j^ive  written  evidence  of  such  subscription  or  obliga- 
tion, it  is  not  thereby  empowered  to  issue  negotiable 
paper  for  the  amount  of  indebtedness  incurred  by  the 
subscription.*  But  municipal  bonds  issued  without  au- 
thority of  law,  and  therefore  void,  may  be  validated  by 

1  Hasbrouck  v.  Milwaukee,  13  Wis.  43. 

2  Mississippi,  etc.  R.  Co.  v.  Camdea,  23  Ark.  300;  Pitzman  v.  Free- 
berg,  93  111.  Ill;  Barnes  v.  Lacon,  84  111.  461;  City  of  Aurora  v.  West, 
23  Ind.  88;  Dranesburgh  v.  Jenkins,  46  Barb.  (N.  Y.)  294;  Taxpayer 
T.  Tennessee  C.  R.  Co.,  11  Lea  (Tenn.),  339;  Wells  v.  Supervisors,  103 
U.  S.  635;  Lewis  v.  Clarendon,  5  Dill.  (U.  S.)  339. 

3  Donovan  v.  Green,  57  111.  63;  Clay  v.  County,  4  Bush  (Ky.),  154; 
Weismer  v.  Douglas,  61  N.  Y.  91;  Police  Jury  v.  Britton,  15  Wall. 
(U.  S.)  566;  Savings  Association  v.  Topeka,  3  Dill.  (U.  S.)  376;  Com- 
mercial Bank  v.  lola,  3  Dill.  (U.  S.)  353. 

<  Concord  v.  Robinson,  131  U.  S.  165. 

5  Hill  V.  Memphis,  134  U.  S.  198;  Police  Jury  v.  Britton,  15  Wall. 
<U.  S.)  566;  The  Mayor  v.  Ray,  19  Wall.  (U.  S.)  468;  Claiborne  County 
V.  Brooks,  111  U.  S.  400;  Young  v.  Clarendon  Township,  133  U.  S.  340. 


§  238.]  MUOTCIPAL    SECURITIES.  311 

an  act  of  the  legislature  passed  for  that  purpose,  if  the 
legislature  of  the  state  could  authorize  the  issuing  of  simi- 
lar bonds.^ 

§  238.  Poiver  to  suhscrihe  to  railroad  stock. —  A  munici- 
pal corporation  cannot  subscribe  for  stock  in  a  railroad 
corporation  unless  it  has  the  authorit}^  of  the  legisla- 
ture for  the  act.^  The  legislature  usually  requires  the 
approval  of  the  electors  of  incorporated  towns  and  cities, 
or  other  municipalities,  at  an  election  for  that  purpose,  as 
a  condition  to  such  subscription,  and  when  the  sanction 
of  a  popular  vote  is  required  it  must  be  obtained.  So 
where  an  act  of  the  legislature,  authorizing  a  town  to  sub- 
scribe to  the  capital  stock  of  a  railroad  company,  provided 
that  if  a  majority  of  the  legal  voters,  voting  at  an  election 
held  for  that  purpose,  shall  be  found  to  be  in  favor  of 
such  subscription,  it  shall  be  deemed  and  held  that  such 
town  has  taken  stock  in  said  company  according  to  the 
proposals  made,  it  was  held  that  the  statutes  make  such 
a  majority  vote  equivalent  to,  and  a  substitute  for,  a  sub- 
scription by  the  town  upon  the  books  of  the  company.' 
Accordingly  where,  upon  the  performance  of  certain  condi- 
tions precedent,  the  issue  of  bonds  to  a  railroad  company  by 
the  proper  officers  of  a  municipality  is  authorized  by  law, 
the  bonds  when  issued,  if  they  recite  such  performance, 
are,  in  the  hands  of  a  bona  fide  holder  for  value,  binding 

1  Deyo  V.  Otoe  County,  37  Fed.  Rep.  246. 

2  Town  of  East  Oakland  v.  Skinner,  94  U.  S.  255;  Township  of  Elm- 
wood  V.  Maroy,  92  U.  S.  289;  Gelpcke  v.  Dubuo-ie.  1  Wall.  (U.  S.)  175; 
Thompson  v.  Lee  County,  3  Wall.  (U.  S.)  327:  i'lne  Grove  Township 
V.  Talcott,  19  Wall.  (U.  S.)  666;  Loan  Association  v,  Topeka,  20  WalL 
(U.  S.)  655. 

3  East  Lincoln  v.  Davenport,  94  U.  S.  801 ;  Migret  v.  Supervisors, 
19  Wall  (U.  S.)  241. 


312  MUNICIPAL   SECUKITIES.  [§  239', 

upon  the  municipality.^  And  if  a  legislature  has  power 
to  authorize  a  subscription  to  stock  of  a  railroad  by  a 
township,  and  to  provide,  as  a  condition  precedent  to  such 
subscription,  that  a  majority  of  the  legal  voters  of  such 
township  signify  their  assent  thereto,  it  has  the  power  to 
legalize  an  election  held  for  that  purpose  before  the  pas- 
sage of  the  act  of  authorization,  and  to  validate  a  sub- 
scription so  made.^  "Where  the  statute  authorizing  a 
county  to  subscribe  to  the  capital  stock  of  a  railroad  com- 
pany declares  that  subscriptions  should  not  be  valid  and 
binding  until  conditions  precedent  imposed  by  the  vote 
should  have  been  complied  with,  and  a  vote  is  had  in 
favor  of  a  subscription  payable  in  county  bonds,  "•  said 
bonds  to  be  issued  upon  the  following  conditions,  and  not 
until  they  are  complied  with,"  a  condition  that  the  road 
shall  be  commenced  and  completed  within  a  specified 
time  is  a  condition  precedent,  and  if  bonds  are  issued 
without  a  compliance  therewith  they  are  void.^  So  it 
has  been  held  that  if  a  county  has  voted  an  issue  of  bonds 
in  aid  of  the  construction  of  a  railroad  upon  the  condi- 
tion that  the  road  shall  be  constructed  and  in  operation 
by  a  certain  day,  and  that  the  company  should  locate 
their  machine  shops  at  a  certain  specified  place,  bonds 
issued  by  the  county  are  invalid  if  the  company  has  not 
fulfilled  the  conditions.* 

§  239.  Limitation  on  amount  of  siihscription. —  Where 
the  amount  of  the  subscription  fixed  by  the  legislature 

1  Commissioners  v.  January,  94  U.  S.  202;  Commissioners  v.  Bollesr 
94  U.  S.  104 

2  Anderson  v.  Township  of  Santa  Ana,  116  U.  S.  356;  St.  Joseph 
Township  v.  Rogers,  16  Wall.  (U.  S.)  644;  Cowgill  v.  Long,  15  111.  202; 
Keithburg  v.  Frick,  34  111.  405;  Fanning  v.  Schammel,  68  Cal.  428;. 
People  V.  McCune,  57  Cal.  153. 

3  German  Sav.  Bank  v.  Franklin  Co.,  128  U.  S.  526. 
<  Onstott  V.  People,  15  N.  R  Rep.  34. 


§  24.0.]  MUNICIPAL    SEOUKITIES.  313 

has  been  reached,  any  subscription  beyond  that  amount 
and  any  issue  of  bonds  therefor  will  be  invalid.^  So 
where  the  amount  of  subscription  is  properly  limited  in 
the  submission,  and  the  election  results  in  favor  of  the 
proposition,  this  does  not  fix  the  amount  of  subscription, 
but  vests  in  the  proper  authorities  a  discretionary  power 
as  to  the  amount  of  stock  to  be  taken  and  bonds  issued 
not  to  exceed  the  amount  specified  in  the  submission.^ 

§  240.  Levying  a  tax  to  pay  subscription. —  "Where  the 
law  authorizes  the  donation  of  money  by  a  municipal 
corporation  to  aid  in  the  construction  of  a  railroad,  and 
provides  for  levying  a  tax  to  raise  the  amount  to  be  do- 
nated, the  officers  of  the  corporation  cannot  adopt  any 
other  mode  of  paying  the  same,  and  bonds  issued  by  them 
for  the  purpose  of  paying  such  indebtedness  are  void.' 
And  where  an  act  of  the  legislature  gives  to  a  town  au- 
thority to  vote  a  donation  in  aid  of  a  railroad  company, 
and  levy  and  colled  taxes  to  pay  the  same,  the  railroad 
company  cannot  be  compelled  to  accept  bonds  issued  by 
the  municipality,  because  the  road  has  only  a  claim  for 
money  and  has  no  right  to  say  how  the  money  shall  be 
raised.* 

1  Amey  v,  Allegheny  City,  24  How.  364. 

2  Winter  v.  City  Council,  65  Ala.  403. 

3  Town  of  Middleport  v.  ^tna  Ins.  Co.,  83  111.  563. 
<  Chicago,  etc.  R.  Co.  v.  St.  Anne,  101  111.  151. 


INDEX. 

Beferences  are  to  sections. 

A. 

ABATEMENT  OF  NUISANCES  (see  Nuisances). 
ABUTTER: 

assessment  on,  for  street  improvements,  201. 

ACCIDENTS  UPON  STREETS  (see  Streets  and  Sidewalks): 
liability  of  municipal  corporation  for,  204. 
city  not  insurer  against,  204. 

not  liable  for  injuries  caused  to  person  by  others  coasting  on,  204. 
nor  to  person  injured  by  discharge  of  cannon,  204. 
nor  by  fall  of  snow  from  roof,  204. 
nor  by  fall  of  weight  attached  to  flag  across  street,  204. 
nor  injury  by  mob,  204. 
but  liable  for  injuries  when  officers  have  knowledge  of  defect, 

204. 
liable  for  injuries  from  awning  over  sidewalk,  204 
from  injuries  from  falling  in  sewer,  204. 
for  injuries  from  hole  in  embankment,  204. 
for  injuries  from  defective  sidewalk,  205. 
not  liable  for  injuries  from  ice  on  sidewalk,  205. 

ACCOMMODATION  PAPER  (see  Negotiable  Instruments): 
liability  of  corporation  on,  to  bona  fide  holder,  104. 

ACKNOWLEDGMENTS : 

what  certificate  should  state,  89. 
when  no  particular  mode  directed,  89. 
by  oflScer  who  affixes  seal,  89. 

ACTIONS  (see  Courts;  Executed  Contracts): 
on  illegal  contracts,  general  rule,  69. 

any  undertaking  to  promote  unlawful  object  will  not  maintain, 
69,74. 


316  INDEX. 

References  are  to  sections. 

ACTIONS  (continued): 

no  distinction  between  acts  malum  in  se  and  malum proMhitum 

relative  to,  69, 
courts  will  not  assist  in  maintaining,  on  ultra  vires  acts,  69,  70, 
ultra  vires  as  defense  to,  70. 
no  performance  of  ultra  vires  contract  gives  foundation  for  right 

of,  70,  72. 
court  must  be  satisfied  of  legality  of  contract  before,  71. 
no  alleged  estoppel  can  give  right  of,  71. 
on  executed  ultra  vires  contract,  72. 
in  courts  of  equity  and  at  law,  73. 
for  relief  on  ultra  vires  contract,  74,  75. 
suing  to  recover  as  on  quantum  meruit,  74,  75. 
relief  on  quantum  meruit  and  under  statute  of  frauds  compared, 

75, 

AGENTS  (see  Officers  and  Agents;  Directors): 
acts  of,  confounded  with  corporate  acts,  150. 
distinction  between,  151, 
directors  are,  of  corporations,  151, 
xiltra  vires  acts  of,  not  imputable  to  corporation,  151. 
test  to  distinguish  acts  of,  from  corporate  acts,  152, 
what  reasonably  incidental  to  corporate  business,  152. 
have  no  power  to  bind  by  contracts  outside  corporate  business, 

152, 
cashier  of  bank  as,  160, 

liability  of  corporation  for  torts  of,  162,  163. 
for  negligence  and  omissions  of,  162. 
for  malicious  prosecutions,  libel,  false  imprisonment  or  false 

representations  of,  162, 
doubt  as  to  liability  for  slander,  162. 
defense  of  ultra  vires  for  torts  of,  not  allowed,  163. 
authority  of  in  fixing  liability,  164. 
acts  must  be  connected  with  business  for  which  employed,  164. 

AID   TO    RAILROADS  (see   Municipal   Corporations;   Bonds; 
Municipal  Bonds). 

ALIENATION  (see  Conveyances). 

AMALGAMATION  (see  Consolidation  and  Amalgamation;  Rail- 
road Corporations). 


INDEX.  317 

References  are  to  sections. 
ARBITRATION: 

municipal  corporation  may  submit  unsettled  claims  to,  195. 

power  must  be  exercised  by  ordmance  or  resolution,  195. 

when  assessment  of  damages  may  not  be  submitted  to,  195. 
ASSIGNMENT: 

directors  may  make,  for  benefit  of  creditors,  11,  155. 

insolvent  corporations  may  make,  91. 

may  not  divert  property  from  payment  of  debts  by,  91. 

by  president,  is  company's  contract,  91. 

shares  of  stock  may  be  assigned  to  creditors,  91. 
ASSUMPSIT  (see  Quantum  Meruit). 

B. 

BANKS  (see  National  Banks): 

may  own  and  convey  real  property,  85.  157. 

but  only  for  purposes  prescribed  in  charter,  85. 

power  to  convey  includes  power  to  mortgage,  85. 

may  make  negotiable  paper,  103. 

power  to  discount  does  not  imply  power  to  purchase,  103. 

power  to  increase  capital  stock,  111. 

directors'  powers  over  affairs  of,  limited,  157. 

must  exercise  care  and  prudence  in  administration  of  affairs, 
157. 

may  commit  afi'airs  of  to  duly  authorized  oflScers,  157. 

directors  are  liable  to,  for  wrong-doing  resulting  from  gross  in- 
attention to  business,  157. 

have  no  ownership  in  assets  of,  157. 

when  not  chargeable  with  assets  of,  158. 

not  liable  to,  for  misconduct  of  co-director,  158. 

president  of,  no  more  control  of  property  than  any  other  di- 
rector, 158. 

acts  of,  outside  official  duties,  not  binding  on,  159. 

cannot  dispose  of  cash  and  credits  of,  to  settle  creditors'  de- 
mands, 159. 

cannot  release  claim  of,  against  any  one,  159. 

personally  liable  for  overdrafts  allowed  on,  159. 

cashier  presumed  to  have  necessary  power  to  transact  busi- 
ness of,  160. 

may  indorse  commercial  paper  of,  160. 

receive  funds  coming  to  and  give  certificates  for,  160. 


318  INDEX. 

References  are  to  sections. 
BANKS  (continued): 

collect  debts  owing  to,  161. 

release  debt  secured  by  mortgage,  161. 

may  borrow  money  for,  and  bind  bank  by  promissory  note,  161. 

may  draw  checks  on  funds  of,  161. 

may  transfer  shares  of  stock  of,  161. 

may  deliver  notes  of  to  attorney  for  collection,  161. 

but  may  not  compromise  claims  of,  161. 

nor  transfer  non-negotiable  notes  of,  161. 

nor  discharge  surety  on  note  to,  161. 
BEQUEST: 

corporation  may  take  personal  property  by,  95. 

may  take  its  own  stock  by,  95. 

of  money  to  church,  95. 

to  corporation,  for  education  of  students,  95. 

to  city,  of  money  for  hospital,  95. 

to  city,  for  relief  of  blind  and  lame,  95. 

BORROWING: 

power  of  corporation  as  to,  96. 

incidental  to  every  corporation,  96. 

but  prohibition  against  must  be  obeyed,  96. 

not  permitted  by  company  constituted  for  special  purposes,  96. 

test  to  determine  if  transaction  is,  97. 

banks  have  implied  power  to,  98. 

power  to  borrow  gives  no  right  to  issue  irredeemable  bonds,  98. 

benefit  society  no  power  without  special  authority,  98. 

where  power  to  borrow  gives  right  to  secure  loan,  98. 

instances  where  power  allowed,  98. 
BONDS  (see  Municipal  Bonds;  Railroad  Bonds). 

c. 

CALLS  (see  Capital  Stock): 
future  calls  as  assets,  125. 
as  to  mortgage  or  pledge  of,  125. 

CAPITAL  STOCK  (see  Stock  and  Stockholders): 
definition  of,  106. 
nature  and  purpose  of,  106. 
as  a  trust  fuod,  107. 
unpaid  stock  as  assets,  107. 


INDEX.  319 

References  are  to  sections^ 

CAPITAL  STOCK  (continued): 

limitation  on  doctrine  as  trust  fund,  108. 
only  when  corporation  insolvent,  108. 
power  to  increase,  109. 

power  may  be  conferred  subsequent  to  grant  of  charter,  110. 
consent  of  stockholders  necessary,  110. 
power  of  national  bank  to  increase.  111. 
power  to  reduce  not  implied  by  power  to  increase,  118. 
fund  cannot  be  increased  or  diminished  without  legislative  li- 
cense, 113. 
reduction  of  as  dissolution  of  old  corporation,  113. 
reduction  of  in  England,  114. 
power  to  issue  new  stock,  115. 

as  to  special  stock  under  Massachusetts  statute,  116. 
ultra  vires  to  issue  shares  at  discount,  117. 
power  to  issue  preferred  stock,  118. 
must  be  expressly  conferred,  118. 
liability  on  ultra  vires  issue  of,  119, 127. 
dealing  in  own  stock,  130. 
purchasing  stock  of  another  corporation,  121. 
may  take  in  payment  of  debt,  121. 
declaring  dividends,  124, 
liability  on  declared  dividends,  126. 
as  individual  property  of  stockholder,  126. 
declaration  of,  discretionary  with  directors,  126. 
future  calls  as  assets,  125. 
mortgage  or  pledge  of,  125. 

CHARTERS  (see  Construction  of  Charteks): 
grant  from  sovereign  power  of  state,  3. 
must  be  certified  by  directors  and  recorded,  S. 
what  must  specify,  3. 

powers  in,  which  contravene  statute,  void,  5 
creates  subscribers  a  corporation,  3. 
what  acceptance  of,  implies,  4 
general  rule  of  construction,  8. 
to  be  strictly  construed,  8. 
ambiguity  in,  vitiates  grant,  8. 
province  of  court  in  construing,  12,  48. 
construction  of,  as  to  incidental  powers,  13. 
not  only  grants  rights,  but  imposes  duties,  19. 


320  INDEX. 

References  are  to  sections. 

CHARTERS  (continued): 

acceptance  of  i-ights  is  assumption  of  duties,  19. 

contract  which  binds  both  state  and  corporation,  19. 

when  prescribes  mode  of  contracting,  must  be  strictly  pur- 
sued, 52. 
CITIES  AND  TOWNS  (see  Municipal  Corporations). 
CONDITIONS  PRECE.DENT  (see  Municipal  Bonds). 
CONSOLIDATION  AND  AMALGAMATION  (see  Railroad  Cor- 
porations): 

definition  of  consolidation,  143. 

definition  of  amalgamation,  143. 

corporations  can  consolidate  only  \yith  consent  of  legislature, 
143. 

authority  may  be  conferred  by  original  charter,  143. 

or  by  general  or  special  act  of  legislature,  143. 

or  even  by  express  sanction  of  unauthorized  agreement,  143. 

agreement  between  directors  to,  ultra  vires,  143. 

effect  of  variously  stated,  144. 

effect  of  interstate  consolidation,  145. 

of  stock,  does  not  constitute  one  corporation  of  both  states,  145. 

subject  to  control  of  each  state,  145. 

treated  in  each  state  as  domestic  corporation,  145. 

consolidated  company  has  all  rights  and  subject  to  liabilities  of 
corporations  of  which  composed,  146. 

may  take  advantage  of  all  contracts  and  enforce  all  debts,  146. 

liable  for  all  torts  committed  by  various  corporations,  146. 

newly-created  company  entitled  to  all  property,  146. 

where  indebtedness  of  old  company  has  not  ripened  into  lien, 
146. 

stockholders  not  bound  by,  without  consent,  147. 

stockholders  of  old  entitled  to  withdraw  shares,  147. 

where  two  corporations  consolidate,  exemption  of  one  from  taxa- 
tion will  not  inure  to  the  other,  148. 

when  immunity  of  old  corporation  does  not  inure  to  new,  148. 

when  exemption  of  shares  of  old  passes  into  new,  148. 

CONSTRUCTION  OF  CHARTERS  (see  Charters): 
general  rule  of  construction,  8. 
charters  to  be  strictly  construed,  8. 
ambiguity  vitiates  grant,  8. 
province  of  court  in,  12,  48. 


V 


INDEX.  ^"^ 


References  are  to  sections. 


CONSTRUCTION  OF  CHARTERS  (continued): 
of  incidental  powers,  13. 

tendency  to  disregard  statutory  enactments,  18,  49. 
intention  of  legislature  should  control,  49. 
substitution  of  judicial  for  legislative  will,  49. 

CONTRACTS  (see  Corporations;  Ultra  Vires): 
doctrine  of  ultra  vires  applied  to,  47. 
incidental  powers  as  to,  50. 
corporate  contract  is  act  of  legal  entity,  50. 
irregularity  no  defense  to  liability  on,  51. 
officers  cannot  bind  by,  beyond  charter  limits,  53. 
ultra  vires  and  illegal;  alleged  distinction,  55. 
prohibited  contracts,  illegal,  56. 
courts  cannot  legalize  by  ignoring  statutes,  57. 
Morawetz  on  unauthorized  and  illegal,  57. 
ultra  vires  contracts  not  enforceable,  69,  70,  71. 
performance  or  part  performance  will  not  make  valid,  70,  73. 
as  to  performance  by  innocent  party,  58,  61,  63. 
as  to  relief  on  ultra  vires  contracts,  74,  75. 
relief  under  statute  of  frauds  compared  with,  75. 
general  doctrine  of  ratification,  76. 
•effect  of  ratification,  77. 

ultra  vires  contracts  incapable  of  ratification,  78,  194 
promoters'  contracts  may  be  ratified,  79. 
as  to  unauthorized  contracts  of  directors,  151. 
actions  on  illegal,  69. 

action  on  executed  tiltra  vires  contracts,  73. 
in  courts  of  equity  and  at  law,  73. 
of  municipal  corporations,  188. 
general  powers  as  to,  188. 
prescribed  mode  must  be  pursued,  189. 
not  bound  by  ultra  vires  contracts  of  officers,  190. 
implied  municipal  contracts,  191. 
of  compromise  and  arbitration,  195. 
limitation  on  indebtedness  by,  196. 

CONVEYANCES: 

power  to  acquire  implies  power  to  convey,  83. 
corporation  may  sell  all  property  for  lawful  purpose,  83,  85. 
power  to  convey  implies  power  to  mortgage,  84 
must  be  executed  in  corporate  name  under  seal,  87. 
21 


^ 


322  INDEX. 

References  are  to  sections. 

CONVEYANCES  (continued): 

may  be  made  by  agent  having  authoritj',  87,  88. 
as  evidence  of  title  when  made  by  agent,  88. 
what  certificate  to  should  state,  89. 

when  no  particular  mode  of  acknowledgment  directed,  89. 
affixing  corporate  seal,  90. 

invalid  when  oflScer  executes  in  own  name,  90. 
CORPORATIONS  (see  De  Facto  Corporations;  Foreign  Corpo- 
rations;  Municipal    Corporations;    Railroad   Corpora- 
tions; Powers  of  Corporations): 
a  legal  entity,  3. 

general  character  and  attributes,  3. 
property  and  powers  vested  in,  3. 
acts  within  chartered  powers  only  affect,  2. 
acts  of  officers  beyond,  not  ascribed  to,  3,  17. 
confusion  of  with  individuals  composing,  3. 

created  only  by  virtue  of  legislative  enactment,  3,  4 
no  express  words  required  to  create,  3. 

manner  of  creation  prescribed  by  general  laws,  3. 

special  acts  of  incorporation  now  generally  prohibited,  3. 

nature  of  not  changed  by  organization  under  general  laws,  3. 

act  of  incorporation,  enabling  act,  31. 

limited  management  and  liability  under  legislative  acts,  3. 

charters  of,  to  be  recorded,  3. 

specifications  in  charter  which  contravene  statute,  void,  3. 

strict  compliance  with  law  required  before  in  esse,  3. 

powers  of,  depend  on  law  of  creation,  3,  19. 

have  no  natural  or  inherent  capacities,  19. 

charter  creates  subscribers  a  corporation,  3. 

creation  of,  based  on  theory  of  benefit  to  public,  4 

distinction  between  and  natural  persons,  5. 

distinction  between  and  partnerships,  6. 

as  organized  under  general  and  special  laws,  7. 

general  powers  possessed  by,  7,  9,  13,  31,  33. 

powers  granted  to  be  strictly  construed,  8. 

object  of  construction  to  protect  public,  8. 

construction  not  to  defeat  legislative  intent,  8. 

strict  construction  peculiarly  applicable  to  organization  under 
general  laws,  10. 

province  of  court  in  construing  powers,  13,  18. 

should  not  enlarge  powers  beyond  limits  of  charter,  13. 


INDEX.  323 


References  are  to  sections. 


CORPORATIONS  (continued): 

specific  grant  of  powers  implies  inhibition  of  others,  13. 

what  are  incidental  powers,  13. 

discretion  in  exercising  powers,  14. 

when  mode  prescribed  can  be  exercised  in  no  other  way,  14 

miscellaneous  incidental  powers,  15. 

contracts  of,  disabling  performance  of  duties,  ultra  vires,  19. 

acts  under  assumption  of  powers,  void,  19. 

all  persons  bound  to  take  notice  of  limits  of  powers,  53. 

if  powers  are  exceeded,  state  may  take  away  charter,  53. 

not  liable  on  ultra  vires  contracts,  54. 

capacities  of,  analogous  to  those  resting  under  legal  disability, 

60. 
performance  of  ultra  vires  contract  by  innocent  party,  58, 61, 62. 
San  Antonio  v,  Mehaffey,  63. 
Railway  Co.  v.  McCarthey,  64. 
Hitchcock  r.  Galveston,  65. 
Jones  V.  Guaranty  Co.,  66. 
National  Bank  v.  Mathews,  69. 
Central  Trans.  Co.  v.  Pullman  Co.,  68. 

COURTS  (see  Actions;  Construction  op  Charters): 

province  of  in  construing  charters,  13,  18.  > 

tendency  of  to  disregard  statutes,  18,  49. 
substitution  of  judicial  for  legislative  will,  49. 
will  not  enforce  contract  violative  of  statute,  69. 
or  ultra  vires,  70. 

must  be  satisfied  of  legality  of  contract,  71. 
and  one  over  which  accustomed  to  exercise  jurisdiction,  71. 
no  estoppel  will  induce  to  enforce  ultra  vires  contract,  71. 
neither  m  equity  nor  at  law,  73. 
difference  between  merely  forms  and  remedies,  73. 
must  accept  contracts  as  they  find  them,  73. 
no  power  to  make  contracts  for  parties,  73. 
will  grant  relief  on  idtra  vires  contracts  as  on  quantum  meruit, 
74. 

D.     - 

DEEDS  (see  Conveyances). 
DE  FACTO  CORPORATIONS: 

when  estopped  from  denying  legality  of  organization,  168. 

when  person  dealing  with,  also  estopped,  168. 


324  INDEX. 

References  are  to  sections. 

DE  FACTO  CORPORATIONS  (continued): 

validity  of  organization  cannot  be  impeached  collaterally,  168. 
acts  of  officers  under  color  of  election,  binding  on,  168. 
effect  of  presuming  to  act  before  capital  paid  in,  168. 
continuing  to  act  after  expiration  of  charter.  168. 
DIRECTORS  (see  Agents;  Officers  and  Agents): 
confounding  acts  of  with  corporate  acts.  150. 
distinction  between  and  corporate  acts,  151. 
acts  of  within  limits  of  corporate  powers,  151. 
are  agents  of  corporation,  151. 

acts  outside  sphere  of  agency  unlawful  usurpations,  151. 
acts  of  beyond  prescribed  corporate  powers,  not  corporate  acts, 

151. 
test  to  distinguish  from  corporate  acts,  152. 
to  determine,  charter  must  be  consulted,  153. 
bona  fides  not  sole  test,  152. 
relation  to  stockholders  as  that  of  trustees,  153. 
essential  distinction  between  and  trustees,  153. 
general  powers  of,  154. 

no  power  to  bind  outside  corporate  powers,  154. 
not  presumed  to  have  powers  corporation  itself  has  not,  154 
cannot,  as  creditors,  secure  to  themselves  preference,  155. 
may  make  valid  assignment  for  benefit  of  creditors,  155. 
declaration  of  dividends  with  knowledge  of  no  profits,  illegal, 

155. 
courts  will  enjoin  ultra  vires  act  approved  by,  155. 
cannot  enforce  contract  made  with  co- director,  155. 
resolutions  by,  to  assume  debts  of  rival  corporation,  ulti'a  vires, 

155. 
general  liability  of,  156. 

error  of  judgment  will  not  subject  to  liability,  156. 
personally  liable  for  violation  of  charter,  156. 
liable  for  want  of  good  faith  or  wilful  abuse  of  discretion,  156. 
or  gross  negligence,  156. 

personally  liable  for  waste  of  corporate  funds,  156. 
powers  of  bank  directors,  157. 

may  commit  affairs  of  bank  to  duly  authorized  officers,  157. 
liable  for  wrong-doing,  when,  157. 
have  no  title  to  assets,  157. 

personally  liable  for  issue  of  spurious  stock,  158. 
not  chargeable  with  assets  unless  appropriated  by,  158. 
not  liable  for  loss  occasioned  by  fraud  of  co-director,  158. 


INDEX.  325 

References  are  to  sections. 
DIVIDENDS: 

definition,  124. 

declaration  of,  discretionary  with  directors,  124. 

where  right  to  fixed  by  contract,  court  will  compel  declaration, 

124. 
directors  cannot  discriminate  between  stockholders,  124. 
after  declaration  of,  belongs  to  stockholder,  126. 
as  to  liability  after  notice  of,  126. 
as  to  liability  if  declared  payable  elsewhere  than  at  office,  126. 

E. 

EMINENT  DOMAIN: 

definition,  183. 

for  what  purposes  may  be  exercised,  86,  183. 
right  not  to  be  extended  by  implication,  86. 
as  to  sale  of  real  property  acquired  by,  86. 
distinction  between  and  taxation,  184. 

ESTOPPEL: 

the  doctrine  as  applied  to  executed  contracts,  58,  59,  60. 

not  applicable  to  unauthorized  act  of  officer,  59,  192. 

doctrine  of,  no  more  applicable  to  corporations  than  to  persons 

under  legal  disability,  60. 
powers  of  corporation  and  married  woman  compared  relative 

to,  60. 
EXECUTED  CONTRACTS  (see  Contracts;  Corporations;  Ultra 

Vires): 
doctrine  of  ultra  vires  as  applied  to,  58-62. 
as  to  alleged  rule  that  doctrine  should  not  be  applied  to,  58. 
fallacy  of  alleged  rule  shown,  59,  60,  61,  62. 
cases  cited  to  support  rule  not  applicable,  63,  64,  65,  66,  67,  68. 
Taylor  on  alleged  rule,  61. 

F. 

FOREIGN  CORPORATIONS: 

general  rule  as  to  powers  of,  165. 

powers  depend  on  laws  of  sovereignty  where  exercised,  165. 

can  make  no  contract  without  sanction  of  such  sovereignty, 

165. 
absence  of  prohibitory  legislation  relative  to,  presumes  tacit 

adoption  of  foreign  laws,  166. 


326  INDEX. 

References  are  to  sections. 

FOREIGN  CORPORATIONS  (continued): 

individuals  cannot  complain  because  business  is  being  done  by, 

166. 
contractual  powers  similar  to  domestic  corporation,  167. 

FRANCHISES: 

cannot  be  leased  or  transferred  without  legislative  authority, 
137. 

lease  of,  ultra  vires,  138. 

cannot  mortgage,  141. 

cannot  be  levied  upon  by  execution,  141. 

mortgage  or  transfer  of,  may  be  ratified  by  subsequent  enact- 
ment, 141. 

alleged  distinction  between  franchise  to  be  a  corporation,  and 
as  a  corporation  to  operate  railway,  141. 
FUTURE  CALLS  (see  Calls). 

G. 

GAS  COMPANIES  (see  Municipal  Corporations): 

as  to  exclusive  privileges  to,  216. 

municipal  corporations  may  contract  with,  for  gas  supply,  217. 

rates  of,  may  be  regulated  by  city,  218. 
GUARANTY: 

railroad  company  no  power  to  guaranty  bonds  of  another  with- 
out express  authority,  136. 

has  power  to  guaranty  bonds  received  in  payment  of  debt  due 
it,  136. 

where  guaranty  ultra  vires,  stockholders  estopped  from  repudiat- 
ing, 136. 

HYPOTHECATION  OF  STOCK  (see  Pledge). 

I. 

ILLEGAL  COMBINATIONS: 
definition,  149. 

how  combination  usually  consummated,  149. 
power  of  trustees  under,  149. 
dividends  made  from  common  fund,  149. 


INDEX.  327 

References  are  to  sections. 

ILLEGAL  CONTRACTS  (see  Contracts;  Ultra  Vires). 
liMPLIED  POWERS  (see  Incidental  Powers). 

INCIDENTAL  POWERS  (see  Powers  of  Corporations): 
definition  of,  13. 

power  to  acquire  real  estate,  81,  85. 
power  to  borrow  money,  96. 
to  make  negotiable  paper,  100. 

INCREASE  OF  CAPITAL  STOCK  (see  Capital  Stock). 

J. 

JURISDICTION  (seq  Actions;  Courts). 

L. 
LAND  (see  Real  Estate). 
LEASE: 

road  and  franchises  may  not  be  transferred  by  without  express 

authority,  137. 
denied  on  theory  of  duties  to  public,  137. 
instances  where  denied,  137. 

will  not  be  set  aside  at  suit  of  lessor,  though  ultra  vires,  138. 
relief  denied  under  rule  in  pari  delicto  potior  est  conditio  de- 

fendentis,  138. 
affirmative  relief  denied  unless  executory,  138. 
when  cannot  lease  real  estate  where  power  to  sell  exists,  139. 
when  made  by  officers  unauthorized,  void,  139. 
where  holders  of  majority  of  stock  cannot  lawfully  authorize, 
139. 

LEVY: 

cannot  be  made  on  franchises  in  execution,  141. 

LIABILITY  OF  CORPORATIONS  (see  Corporations;  Railroad 
Corporations;  Municipal  Corporations): 
where  irregularity  of  proceedings  no  defense  to,  51. 
why  not  liable  on  ultra  vires  contracts,  54. 
on  accommodation  paper,  101. 
on  ultra  vires  issue  of  preferred  stock,  119,  127. 
on  declared  dividends,  126. 
for  consequential  damages,  203. 
for  accidents  upon  sti-eets,  204. 


328  INDEX. 

References  are  to  sections. 

LIABILITY  OF  CORPORATIONS  (continued): 
for  defective  streets  and  sewers,  205,  211. 
as  to  nuisances,  213. 

for  damages  for  inadequate  water  supply,  219. 
doctrine  of  respondeat  superior,  220. 
as  to  ultra  vires  acts  of  officers,  222. 
general  rule  as  to  torts,  162. 
for  tortious  acts  of  agents,  163. 
authority  of  agent  in  fixing,  164 
irregularity  in  bonds  as  affecting.  227. 
effect  of  recitals  in,  as  affecting,  228. 
limitation  on  indebtedness  as  affecting.  231. 
cannot  be  avoided  by  reorganization,  233. 
in  assumpsit  on  invalid  bonds,  234. 

LIBEL: 

corporation's  liability  for,  162. 

LIEX: 

where  indebtedness  of  old  company  on  consolidation  has  not 
ripened  into,  146. 

M. 

MUNICIPAL  BONDS  (see  Municipal  Corporations;: 
power  of  municipality  to  issue,  223. 
no  presumption  as  to  legality  of,  223. 
purposes  for  which  may  be  issued,  224. 
instances  where  power  to  issue  denied,  225. 
formality  in  execution  as  affecting  legality,  226. 
irregularities  in  issuing,  no  defense  to  liability  on,  227. 
recitals  in,  as  affecting  liability,  228. 
who  bona  fide  holders  of,  229. 

Tiower  to  issue  not  implied  from  power  to  borrow,  230. 
limitation  on  indebtedness  as  affecting  legality,  231. 
when  invalid  cannot  be  ratified,  232. 
liability  on,  cannot  be  avoided  by  reorganization,  233. 
liability  in  assumpsit  on  invalid  issue,  234. 
illegal  issue  of,  may  be  enjoined,  235, 
power  to  issue  municipal-aid  bonds,  137,  238. 
limitation  on  subscription  to,  239,  240. 


INDEX.  32^ 

References  are  to  sections. 

MUNICIPAL  CORPORATIONS: 

general  nature  of,  169. 

exercise  of  general  powers  of,  170. 

manner  of  rests  in  their  judgment,  170. 

when  not  liable  for  defects  in  execution  of  powers,  170. 

can  exercise  only  such  powers  as  granted  them,  170. 

no  powers  implied  except  essential  to  purposes,  170. 

acts  beyond  powers  of  no  effect,  170. 

power  requiring  exercise  of  discretion  cannot  be  delegated  by, 
173. 

courts  cannot  interfere  with  discretionary  powers  of,  177. 

ordinances  of,  definition,  171. 

legislature  may  delegate  power  to  enact,  171. 

may  be  conferred  upon  any  department  of  municipality,  171. 

must  be  made  in  subordination  to  general  laws,  172. 

must  be  reasonable,  176. 

but  ordinances  expressly  authorized  by  legislature  cannot  b& 
unreasonable,  176. 

within  limits  of  corporation  have  force  of  laws,  172. 

power  to  pass  includes  power  to  make  effectual,  172. 

distinction  between  judicial  and  ministerial  ordinances,  173. 

effect  of  ultra  vires  ordinances,  174. 

ordinance  levying  tax  for  purpose  unauthorized,  void,  174. 

where  power  exists,  but  exercised  in  unauthorized  manner,  174,. 

validity  of  cannot  be  questioned  collaterally,  174. 

when  ordinance  making  appropriation  ultra  vires,  175. 

instances  of  illegal  and  void  ordinances,  175,  176. 

courts  may  restrain  ultra  vires  ordinances,  178. 
Taxation  — 

power  relating  to,  179. 

may  be  delegated  by  state,  179. 

essential  attribute  to  munici2ml  government,  179. 

power  may  be  revoked,  180. 

can  be  exercised  only  for  public  purposes,  181. 

cannot  levy  taxes  to  aid  private  enterprises,  181. 

or  to  aid  sufferers  by  fire  or  flood,  181. 

taxation  and  power  to  license  distinguished,  182. 
Eminent  Domain  — 

power  to  exercise  right  of,  183. 

distinction  between  and  taxation,  18L 

powers  as  to  real  property,  185. 


S30  INDEX. 

Referenceg  are  to  sections. 

MUNICIPAL  CORPORATIONS  (continued): 
Eminent  Domain  (continued)  — 

apportionment  of  between  old  and  new  municipality,  186. 

powers  of  extinguished  municipalities,  187. 

powers  revert  to  new  town,  187. 
Contracts  — 

powers  as  to,  188. 

usually  conferred  in  incorporating  act,  188. 

mode  prescribed  must  be  strictly  pursued,  189. 

void,  if  mode  prescribed  violated,  189. 

for  public  work  to  lowest  bidder,  189. 

advertisement  and  specifications,  189. 

ofRcers  cannot  bind  by  ultra  vires  contract,  190. 

persons  contracting  with  must  take  notice  of  powers,  190. 

contracts  by,  when  law  requires  advertising,  190. 

as  to  implied  contracts,  191. 

when  estoppel  not  applicable,  193. 

no  estoppel  arises  when  act  violative  of  law,  193. 

acts  without  authority  not  misleading,  193. 

when  estopped  to  deny  Irregularity,  193. 

ratification  of  ultra  vires  contracts,  194. 

no  act  of  can  supply  defect  in,  194. 

may  be  inferred  by  acquiescence,  194. 

may  make  contracts  of  compromise,  195. 

or  submit  unsettled  claims  to  arbitration,  195. 

but  must  be  exercised  by  ordinance  or  resolution,  195. 

when  submission  to  arbitration  ultra  vires,  185. 

limitation  on  contracting  indebtedness,  196. 

when  limit  reached  in,  196. 

cannot  be  evaded  by  future  levies,  196. 

cannot  make  appropriation  for  indebtedness  beyond,  196. 

all  persons  charged  with  notice  of  limitation  on,  196. 

instances  where  increase  beyond  limit  denied,  197, 

equity  will  enjoin  illegal  creation  of,  198. 
^  treets  — 

powers  as  to,  199. 

exclusive  control  over,  199. 

whole  sovereign  power  required  to  confer,  199. 

use  of  must  be  consistent  with  public  objects,  199. 

when  estopped  to  deny  existence  of,  200. 

power  to  grade,  improve  and  alter,  201. 


INDEX.  331 


References  are  to  sections. 


MUNICIPAL  CORPORATIONS  (continued): 
Streets  (continued)  — 

power  to  open,  implied  power  to  grade,  201. 

to  improve  by  assessment,  inhibits  any  other  mode,  201. 

manner  of  improvement  discretionary,  202. 

duty  to  keep  in  repair,  ministerial,  203. 

liability  for  consequential  damages,  203. 

when  not  liable  for,  208. 

instances  of  liability  for,  203. 

liability  for  accidents  upon,  204. 

not  insurers  against  accidents,  204. 

instances  of  liability  for  accidents,  204. 

instances  of  liability  for  defective  streets,  205. 

notice  of  defects  in,  required,  206. 
Sewers  — 

authority  to  construct,  207. 

discretion  as  to  mode,  207. 

discretion  as  to  selection  of  system,  208. 

liability  for  negligence  in  construction,  208. 

duty  to  provide  outlet,  209. 

not  insurer  of  condition  of,  210. 

liability  for  injuries  from  defects  in,  211, 

liability  for  property  flooded  from,  211. 
Nuisances  — 

power  to  abate,  213. 

power  conferred  for  public  good,  212. 

not  liable  for  proper  exercise  of  power  by  oflScers,  212. 

when  not  liable  for  failure  to  abate,  213. 

when  not  liable  for  act  which  results  in,  213. 
Quarantine  Regulations  — 

powers  as  to,  214. 
Wharves  —  t 

no  power  to  lease  to  private  persons,  215. 
Water  and  Gas  Supply  — 

exclusive  privileges  to,  216. 

no  power  to  grant  without  express  authority,  216. 

contracts  for,  217. 

mode  of  furnishing  supply  discretionary,  217. 

power  to  regulate  rates  of,  218. 

ordinance  regulating  not  invalid  because  different  rates  fixed, 
218. 

liability  for  inadequate  water  supply,  319. 


532  INDEX. 


References  are  to  sections. 


MUNICIPAL  CORPORATIONS  (continued): 
Respondeat  Superior — 
doctrine  of,  220. 
when  liable,  220. 

distinction  between  public-gMasi  and  municipal  corporation,  221. 
not  liable  for  ultra  vires  act  of  officer,  223. 

K 

NATIONAL  BANKS  (see  Banks): 

power  of  to  increase  capital  stock,  111. 
NEGOTIABLE  PAPER: 

may  make  for  legitimate  purposes,  100. 

corporation  as  indorsee  of,  101. 

power  of  savings  bank  to  make,  102. 

liability  of  corporation  on  accommodation  note,  104. 

o. 

OFFICERS  AND  AGENTS  (see  Agents;  Directors): 

are  special  agents  of  corporation,  52. 

when  mode  of  acting  by  prescribed  must  be  strictly  pursued,  96. 

have  no  power  except  within  limits  of  charter,  52. 

parties  dealing  with,  charged  with  authority  of,  52. 

execution  of  deeds  by,  90. 

may  prove  corporate  seal,  90. 
President  of  Bank  — 

powers  and  liability  of,  159. 

control  over  corporate  property  as  other  director,  159. 

cannot  settle  demands  of  creditors  without  authority,  159. 

cannot  release  claims  of  bank,  159. 

may  be  invested  with  capacity  to  do  acts  not  inherent  in  office, 
159. 

having  power  to  contract,  may  release  same,  159. 

liable  for  indorsement  in  excess  of  paid-up  capital,  159. 

and  for  overdrafts  which  he  directed,  159. 

and  loss  caused  by  permitting  securities  to  be  carried  away,  159. 
Cashier  — 

powers  and  duties  of,  160. 

presumed  to  have  necessary  powers  to  transact  business,  160. 


INDEX.  333 

Eefercnces  are  to  sections. 

OFFICERS  AND  AGENTS  (continued): 
Cashier  (continued)  — 
powers  habitually  exercised  define  powers  as  to  public,  IGO. 
has  authority  to  indorse  paper  of  bank,  IGO. 
to  receive  funds  and  give  certificates  of  deposit,  160. 
to  collect  debts  owing  to  bank,  160. 
to  release  debt  secured  by  mortgage,  161. 
to  borrow  money  and  bind  bank  by  note,  161. 
to  draw  checks  upon  funds  of  bank,  161. 
to  transfer  shares  of  bank,  161. 
to  deliver  notes  for  collection,  161. 
but  no  power  to  compromise  claims,  161. 
nor  transfer  non-negotiable  paper,  161. 
nor  to  discharge  surety  on  note,  161. 
nor  indemnify  officer  for  levying  execution,  161. 
Torts  — 
general  liability  of  corporation  for,  163. 
rule  stated  by  Cooley,  162. 
liable  for  malicious  prosecution  of,  163. 
for  libel,  163. 

for  false  imprisonment,  163. 
for  false  representation,  163. 
doubt  as  to  liability  for  slander,  163. 
for  conspiracy,  163. 
for  assault  by,  163. 
ultra  vires  no  defense  for  tort,  163. 
authority  in  fixing  liability,  164. 
ORDINANCES  (see  Municipal  Corporations). 

P. 

PLEDGE: 

power  of  corporation  to,  105. 

where  may  contract  debt,  may  pledge  securities  for  payment, 

105. 
call  already  made  may  be  pledged,  125. 
proceeds  of  future  call  may  not  be,  125. 
POWERS  OF  CORPORATIONS  (see  Municipal  Corporations): 
to  acquire  real  property  under  common  law,  81. 
and  under  modern  statutes,  81. 
limits  on  power  generally  prescribed  by  statute,  81. 


334  INDEX. 


References  are  to  sections. 


POWERS  OF  CORPORATIONS  (continued): 

no  power  for  purposes  other  than  objects  of  creation,  81. 
power  to  acquire  by  eminent  domain,  SO, 
to  take  by  devise,  83. 
by  bequest,  95. 

power  to  dispose  of  property,  82. 
power  to  sell  implies  power  to  mortgage,  84. 
power  of  bank  to  hold  and  convey,  85. 
alienation  by  deed,  87. 

conveyance  by  agent,  88.  ' 

to  assign  property  for  benefit  of  creditors,  91. 
to  act  as  trustee,  92. 
must  be  within  scope  of  powers,  93. 
to  borrow  money,  96. 
instances  of  implied  power  to  borrow,  98. 
to  loan  money,  99. 
as  to  negotiable  instruments,  100. 
to  pledge  securities,  105. 
to  increase  capital  stock,  109. 

irregularity  of  exercising  powers  as  affecting  stockholders,  112. 
to  reduce  capital  stock,  113. 

power  to  increase  gives  no  power  to  diminish,  113. 
to  issue  new  stock,  115. 
as  to  special  stock,  116. 
to  issue  at  discount,  117. 
to  issue  preferred  stock,  118. 
to  deal  in  own  stock,  120. 

to  purchase  stock  of  another  corporation,  121. 
instances  where  power  denied,  122. 

of  foreign  to  purchase  stock  of  domestic  corporation,  123. 
such  purchase  ultra  vires,  123. 
to  declare  dividends,  124. 
discretionary  with  directors,  124. 
to  mortgage  future  calls,  125. 
PREFERRED  STOCK  (see  Capital  Stock). 

PROMOTERS: 

no  statutory  authority  to  make  preliminary  contracts,  79. 

if  ratified  by  corporation  and^vithin  its  powers,  enforceable,  79. 

should  be  adopted  in  same  way  corporate  contracts  are  made, 
79. 
PROPERTY  (see  Real  Property). 


i^T)EX.  335 

References  are  to  sections. 

Q. 

QUANTUM  MERUIT  (see  Actions): 

relief  against  ultra  vires  contract  on,  74. 

E. 

RAILROAD  BONDS: 
definition  of,  133. 
power  lo  issue,  133. 

formalities  prescribed  in  issuing  must  be  strictly  pursued,  134. 
negotiability  of,  135. 

usually  payable  to  trustee  named  in  mortgage,  135. 
not  strictly  negotiable  under  law  merchant,  135. 
railroad  company  no  power  to  guaranty  bonds  of  another  com- 
pany, 136. 

RAILROAD  COMPANIES: 

general  power  to  make  contracts,  128. 

may  not  release  itself  by  from  public  duties,  128. 

may  contract  to  carry  beyond  own  lines,  129. 

acceptance  of  goods  where  destination  beyond  own  lines,  129. 

American  doctrine  as  to,  129. 

traflfic  agreements  between,  180. 

contracts  which  prevent  competition  between,  not  necessarily 

contrary  to  public  policy,  130. 
powers  as  to  pooling  contracts,  131. 
definition  of  pools,  131. 
traffic  and  money  pools,  131. 

as  to  regulation  of  rates  by  railroad  commission,  131. 
bonds  of,  definition,  132. 
for  what  purposes  bonds  may  be  issued,  133. 
formalities  prescribed  should  be  strictly  pursued,  134. 
negotiability  of  railroad  bonds,  135. 
power  to  guaranty  bonds  of  another  company,  136. 
power  to  lease  road  and  franchises,  137. 
power  must  be  expressly  conferred,  137. 
where  power  to  lease  denied,  137,  139. 
ultra  vires  lease  not  set  aside  at  suit  of  lessor,  138. 
power  to  mortgage  road  and  franchise,  140,  141. 
power  to  consolidate,  142,  143, 


336  INDEX. 

References  are  to  sections. 

RAILROAD  COMPANIES  (continued): 

definition  of  consolidation  and  amalgamation,  142. 

effect  of  consolidation,  144. 

effect  of  interstate  consolidation,  145, 

rights  and  liabilities  of  consolidated  company,  146. 

consolidation  as  affecting  stockholders,  147. 

consolidation  as  affecting  taxation,  148. 

RAILWAY  AID  BONDS  (see  Municipal  Bonds). 

RATIFICATION: 

general  doctrine  stated,  76. 

to  be  binding  must  be  act  of  corporate  agency,  76. 

cannot  arise  from  action  of  officer  who  had  no  authority  to  do 
original  act,  76. 

nature  and  effect  of  ratification,  77. 

ultra  vires  contracts  cannot  be  ratified,  78. 

by  corporation  of  acts  of  promoters,  79. 
REAL  ESTATE: 

power  of  corporation  to  acquire,  81. 

special  authority  to  acquire  by  devise,  83. 

power  to  acquire  implies  power  to  dispose  of,  83. 

power  to  sell  implies  power  to  mortgage,  84. 

power  of  bank  to  hold  and  sell,  85. 

but  only  for  purposes  set  forth  in  charter,  85. 

power  to  acquire  by  eminent  domain,  86. 

to  alienate  by  deed,  87. 

conveyance  of,  by  agent,  88. 

acknowledgment  of  deeds  to,  89. 

affixing  corporate  seal,  90. 

assignment  of,  for  benefit  of  creditors,  91. 
REDUCTION  OF  CAPITAL  STOCK  (see  Capital  Stock). 
RESPONDEAT  SUPERIOR  (see  Municipal  Corporations). 

S. 

■SALE  OF  ROAD  AND  FRANCHISES  (see  Railroad  Corpora- 
tions). 
STOCK  AND  STOCKHOLDERS  (see  Capital  Stock): 

stockholders  not  the  corporation,  3. 

consent  of,  necessary  to  increase  capital  stock,  110. 


INDEX.  33T 

References  are  to  sections. 

STOCK  AND  STOCKHOLDERS  (continued): 

stockholders  ■who  have  accepted  portions  of  increased  stock  can- 
not deny  validity  of,  112. 

powers  as  to  new  stock,  115. 

may  issue  if  not  cloak  for  watering,  115, 

powers  as  to  special  stock,  116. 

characteristics  of,  116. 

issuing  shares  at  discount,  117. 

issuing  preferred  shares,  118. 

power  must  be  expressly  conferred,  118. 

liability  on  vltra  vires  issue  of,  119. 

power  to  deal  in  own  stock,  120. 

power  in  many  states  regulated  by  statute,  120. 

purchasing  stock  of  another  corporation,  121. 

instances  where  power  denied,  122. 

powers  of  foreign  corporations  as  to,  123. 

power  to  declare  dividends  on  stock,  124. 

stockholders  may  not  be  discriminated  against  in,  124. 

after  declaration  of,  is  individual  property  of  stockholders,  126^ 

stockholder  cannot  become  member  of  company  on  illegal  issue^ 
127. 


TAXATION  (see  Municipal  Corporations): 

power  may  be  delegated  to  municipal  corporations,  179. 
is  essential  attribute  of  municipality,  179. 
but  power  may  be  revoked  by  legislature,  180. 
can  be  exercised  only  for  public  purposes,  181. 
power  to  license  distinguished  from,  182. 
distinguished  from  eminent  domain,  184. 

u. 

ULTRA  VIRES  (see  Contracts;  Corporations;  Powers  of  Cor- 
porations, ETC.): 

legitimately  applicable  only  to  corporate  acts,  1,  17. 

senses  in  which  term  used,  17. 

questions  of  to  be  decided  by  charter,  11. 

principles  governing  relations  of  trustee  not  i^roperly  applica- 
ble, 17. 


338  INDEX. 

Rf^ferences  are  to  sections. 

ULTRA  VIRES  (continued): 

principles  of  doctrine  plain,  18. 

two  propositions  as  to  doctrine  settled,  19. 

chronological  review  of  doctrine,  20-45. 

principles  supporting  doctrine  first  enunciated  in  United  States 

in  1804,  21. 
application  of  doctrine  to  contracts  generally,  47. 
province  of  court  in  applying  doctrine,  12,  18,  48. 
evolved  to  restrict  corporations  to  granted  powers,  48. 
estoppel  as  to  defense  of,  58,  59,  60. 
analogy  of  ultra  vires  acts  of  corporations  to  those  of  persons 

under  legal  disability,  60. 
defense  of  to  actions,  70. 

actions  on  executed  ultra  vires  contracts,  73,  73. 
relief  on  ultra  vires  contract,  74,  75. 

w. 

WHARVES  (see  Municipal  Corporations). 


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